The BSE, which is holding a series of seminars across India to woo small and medium entrepreneurs, market intermediaries and investors to join its up-and-coming Small and Medium Enterprises' Exchange (SME Exchange), has said the new platform is likely to commence operation in September.

Main board

“So far, we have held 15 seminars across the country to educate the SMEs to join the BSE SME Exchange. About 50 SMEs, out of around 4,000 members on the BSE's Main Board, have already agreed to migrate to the new product and list there. They include 10 members from Gujarat,” Mr Lakshaman Gugulothu, Chief Executive Officer of the BSE SME Exchange, told reporters here on Saturday.

In July 2010, the BSE, the NSE, and the MCX-SX had sought permission from the capital market regulator for launching a separate segment for the SMEs.

The Securities and Exchange Board of India had given an in-principle approval to the BSE and the NSE in May 2011 to set up SME exchanges and platforms.

The BSE SME Exchange will provide an opportunity to the entrepreneurs to raise equity capital for the growth and expansion of SMEs.

Besides, the investors will also be able to identity and invest in good companies at an early stage.

“It will help unleash the valuation of the company and in the process create wealth for all stake-holders, besides considerable capital gains tax benefits and facility of exit at any point of time,” Mr Gugulothu said.

The CEO said the issuer with post-issue face value capital up to Rs 10 crore will be covered under the SME platform, while those between Rs 10 crore and Rs 25 crore may get listed on this platform.

Entities having post-issue face value capital above Rs 25 crore will have to be listed on the Main Board.

The BSE Main Board criteria for the paid-up capital has been increased from Rs 3 crore to Rs 10 crore.

On the new platform, the minimum application amount as also the trading lot will be Rs one lakh.

All trading members would be eligible to participate in the SME Exchange without any further registration and by default members. The SMEs would now be able to file only half-yearly results, instead of quarterly ones.

With the initial conditions for an IPO waived off, the SMEs will now be able to hit the capital market in just one to two months, instead of the practice of 8-10 months, and merchant bankers would underwrite 100 per cent of the IPO, 15 per cent of it in their own account.

Market making

The merchant banker to the issue would undertake market-making through a registered stockbroker and will be responsible for market making for a minimum of three years.

It would provide a two-way quote for 75 per cent of time in a day, to be monitored by the stock exchange.

The minimum depth of the quote will be Rs 1 lakh in secondary market and there will be trading of lots of size of Rs 1 lakh. There will not be more than five market makers for a scrip.

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