BSE gets Sebi nod to set up SME exchange

BSE gets Sebi nod to set up SME exchange

Mumbai: Asia’s oldest bourse BSE on Wednesday got an approval to set up an exchange for small and medium enterprises (SMEs) from the capital markets regulator Securities and Exchange Board of India (Sebi).

BSE plans to start the its SME exchange soon, an official said. “We have received the orders from Sebi on Tuesday and we will commence trading in the first week of November. Our system is ready and we have commenced mock trading for the same," BSE SME exchange chief executive Lakshman Gugulothu said.

The new exchange will allow small unlisted domestic companies, with less than 10 crore capital base, to raise money from the primary market.

“We are not in a numbers game. We will not compromise on integrity of the companies looking to get listed on the SME exchange. There are 10-40 firms that have committed to become a part of the exchange so far," said another BSE official on condition of anonymity.

National Stock Exchange (NSE), India’s largest exchange, is still awaiting a formal Sebi approval to start a similar SME exchange. In May, Sebi had given an in-principle approval to both BSE and NSE to set up SME exchanges.

Recently, there have been discussions among the exchange officials and the finance ministry on possible electronic-initial public offering on the SME exchange for eligible firms.

The BSE official cited above said the exchange will offer simple products and trading processes for SME stocks.

NSE is looking at intra-day call auction system—where multiple orders are clubbed together for simultaneous execution of a trade at one price and at a predetermined time—for SME stocks to ensure liquidity.

Meanwhile, BSE recorded a volume of 330 crore in equity derivatives on the first day of liquidity enhancement programme for the 30-share Sensex and each of the underlying stocks on the index.

Sebi, on 2 June, allowed exchanges to introduce programmes to enhance liquidity of thinly-traded securities in their equity derivatives segments.

NSE currently controls almost the entire equity derivatives market, with a turnover of about 29.63 trillion in August. BSE’s comparable turnover was 34.09 crore.

PTI contributed to this story.