India’s market regulator, the Securities & Exchange Board of India (SEBI), has intensified its oversight of trading platforms catering to small and medium-sized enterprises (SMEs). This decision follows a recent surveillance meeting involving key stock exchanges and the regulatory body. Concerns regarding potential stock-price manipulation within the SME segment, coupled with a surge in retail investor interest, prompted this regulatory action.
Both BSE Ltd. and the National Stock Exchange of India (NSEI), two of India’s prominent exchanges, have extended their short-term surveillance measures to encompass companies listed on their SME platforms. This extension builds upon a surveillance framework initially introduced by these exchanges in 2018 for stocks listed on their primary boards. The framework was designed to bolster investor protection through various measures, including narrowing price bands, increasing margin requirements, and transferring securities to a trade-to-trade group, necessitating immediate delivery to curtail speculative activities.
The enhanced regulatory scrutiny comes at a time when India’s SME IPO Index, comprising 63 members, has significantly outperformed the country’s primary equity indices. Since the conclusion of 2019, the SME IPO Index has witnessed an astonishing surge of approximately 1,900%, far surpassing the 59% rise observed in the BSE Sensex Index.
In terms of activity within the SME sector, data available on exchange websites indicates that approximately 135 SME companies have made their market debut this year, with an additional 20 companies expected to follow suit.
