London exchange offers India help for SME bourses

London exchange offers India help for SME bourses
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First Published: Thu, Jan 22 2009. 01 15 AM IST

Easier norms: LSE director of equity markets Martin Graham. Ashesh Shah / Mint
Easier norms: LSE director of equity markets Martin Graham. Ashesh Shah / Mint
Updated: Thu, Jan 22 2009. 11 33 AM IST
Mumbai: A director of London Stock Exchange Plc. (LSE) says the bourse is interested in helping develop exchanges for trading in shares of small and medium enterprises (SMEs) in India.
“We have a unique reputation and expertise in small-cap markets. We run the most successful small-cap market on earth,” Martin Graham, director of equity markets at LSE, said on Wednesday.
Easier norms: LSE director of equity markets Martin Graham. Ashesh Shah / Mint
LSE’s Alternative Investment Market (AIM) provides a platform for small companies and even start-ups to raise money. According to LSE’s website, total trading turnover in AIM in 2008 was £49.2 billion (Rs3.13 trillion), compared with £75 billion a year earlier.
The platform offers easier norms for smaller companies and doesn’t subject them to regulations such as minimum 25% free float or shareholder approval for transactions, which are mandatory for larger firms on the main market.
Graham, who was in India as part of the UK India Business Council, a body for promoting bilateral trade between the two nations, said LSE could provide technical expertise and give small and medium enterprises listed on an SME exchange in India exposure to the global capital markets through AIM.
LSE has an equal-stakes joint venture with the Tokyo Stock Exchange for setting up a market for emerging companies.
Earlier attempts at setting up stock exchanges in India for smaller companies haven’t been successful. For instance, OTC Exchange of India (OTCEI), started in 1990 and modelled on the over-the-counter market in the US, has just 115 firms listed in it, as per information on its website.
AIM has 23 Indian or India-related companies listed on it. In 2008, four Indian companies raised about $400 million (Rs1,964 crore), or 18% of all funds raised in that market, according to LSE.
In October, capital markets regulator Securities and Exchange Board of India (Sebi) had announced it would step up the process of establishing exchanges for small and medium enterprises so that such firms could raise capital quickly and at lower costs.
Sebi is drafting norms for recognition and supervision of such exchanges and has paved the way for public financial institutions and bourses to hold up to 15% equity in these stock exchanges.
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First Published: Thu, Jan 22 2009. 01 15 AM IST