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Welcome!!! You are Visitor No. |
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In order to lay down the policy for issue, listing and trading of securities to be issued by SMEs, necessary amendments have been made in the SEBI ICDR Regulations and consequent amendments have been made into various other regulations viz. : |
- SEBI (Merchant Bankers) Regulations 1992
- SEBI (Foreign Institutional Investors) Regulations, 1995
- SEBI (Venture Capital Funds) Regulations, 1996
- SEBI (Substantial Acquisition of Shares and Takeovers) Regulations and
- SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992
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SEBI has, from time to time, issued the circulars and guidelines for setting up of the exchange for SMEs. SEBI vide “ICDR Third Amendment Regulations” 2010 dated 13th April, 2010, inserted a new Chapter XB under the head “Issue of Specified Securities by Small and Medium Enterprises”. A further circular was also issued on 18th May, 2010 after taking into account the suggestions from market participants for the SME platform. The necessary provisions for listing of specified securities under the SME Platform vide the above regulations and circulars are enumerated in brief: |
- The post issue face value capital should not exceed INR Twenty Five Crores (INR 25 Crore).
- The minimum application and trading lot size shall not be less than INR 1,00,000/-
- The existing members of stock exchanges (stock brokers) would be eligible to participate in SME Platform.
- The issues shall be 100% underwritten and merchant bankers shall underwrite 15% in their own account.
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Besides, SEBI has compulsorily mandated market making for all scrips listed and traded on SME Platform. The obligations of market making are as follows: |
- The merchant bankers to the issue will undertake market making through a stock broker who is registered as market maker with the SME Platform.
- The merchant bankers shall be responsible for market making for a minimum period of 3 years.
- The market makers are required to provide two way quotes for 75% of the time in a day. The same shall be monitored by the exchange.
- There will not be more than 5 market makers for a scrip.
- Market makers will compete with other market makers for better price discovery.
- The exchange shall prescribe the minimum spread between the bid and ask price.
- During the compulsory market making period, the promoter holding shall not be eligible for the offering to market makers.
- Market Maker shall be allowed to de-register by giving one month notice to the exchange.
- Trading system may be either order driven or quote driven.
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The application and trading lot size is being kept at INR 1,00,000/- so as to curtail the exposure of retail investors. It has also been stated that the minimum depth shall be of one lakh rupees and at any point of time it cannot go below that amount. The investors holding with value less than INR 1,00,000/- shall be allowed to offer their holding to the market maker in one lot. However, in functionality the market lot will be subject to revival after a stipulated time.
Further, the provisions of SEBI ICDR Regulations apply to SME IPO as well, unless any particular provision is specifically exempted. |
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