SEBI working on easing SME listing framework: Chairman

The Securities and Exchange Board of India (SEBI) is in the process of thoroughly reviewing the small and medium enterprise (SME) listing framework, according to its Chairman Tuhin Kanta Pandey. Pandey made these remarks during the annual FICCI Capital Markets Conference. He stated that certain aspects of the SME framework are hindering the growth of organizations and enterprises on the SME platform, making their trading challenging.

SEBI has noticed a significant number of odd lots, which complicates investor trading. Moreover, the market-making and underwriting frameworks required for SMEs are not functioning effectively, leading to increased costs for SME IPOs compared to mainboard listings. Pandey also highlighted that the migration to mainboard is currently contingent on a company's paid-up capital, which poses issues and requires reevaluation.

SEBI plans to release a consultation paper on these matters. Additionally, the regulator is developing guidelines for the ethical use of technology, specifically focusing on the responsible application of artificial intelligence (AI) and machine learning (ML) in financial markets. SEBI intends to ensure accountability for any AI or ML tools utilized, whether developed in-house or acquired from external sources.

This includes addressing privacy, security, and data integrity, as well as incorporating safeguards like "kill switches" and "humans in the loop." The regulator has already implemented AI through Project Sudarsan and R(AI)DAR to detect suspicious financial promotions and misleading advertisements. SEBI is also considering greater flexibility for investments in under-construction real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), subject to certain limits.