The Hindu Business Line : SEBI panel to pave way for Indonext

THE Securities and Exchange Board of India is in the process of according in-principle approval to the proposal for the Bombay Stock Exchange-Indonext platform for trading in stocks of small and medium enterprises (SMEs), with an equity base of less than Rs 10 crore.

The SEBI today formed a working group to fine-tune and carry forward the preparatory work, a senior SEBI official told Business Line.

The BSE and the Federation of Indian Stock Exchanges (FISE), the apex body of the regional stock exchanges (RSEs), have put up a formal proposal on the subject in March this year. In May, the proposal was further revised jointly by the two partners in consultation with the market regulator. With the Finance Ministry's backing, technical and legal hurdles that may come in the way could be removed, said Mr Prithvi Haldea, Managing Director of Prime Database.

Mr Haldea, who is involved in the process of recent consultations at SEBI on its primary market panel, said the capital formation of the SME sector, on which the economy depends a lot, will get a booster through the BSE-Indonext platform.

It will also provide liquidity to these stocks, estimated to be about 3,500 in number, at a lower cost, he pointed out. However, many of these companies are non-functional. Operationalisation of the new platform is expected to cleanse the SME sector as a whole.

Under the present scheme of things, all RSE members would be able to have trading rights on this platform for B1, B2 counters of BSE and stocks listed on all the RSEs.

Mr Ramu Sharma, President of the FISE, said that except for the Calcutta Stock Exchange, all other RSEs and the Inter-connected Stock Exchange have consented to join the project so far. Currently, a company with less than Rs 10 crore equity capital cannot qualify for listing on either the BSE or the NSE.

The SEBI is also considering strengthening the clearing and trade guarantee mechanisms of the RSEs before allowing the proposed platform to start functioning.

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