Sebi plans comprehensive review of rules governing SME IPOs

The Securities and Exchange Board of India (Sebi) intends to conduct an in-depth examination of rules governing Initial Public Offerings (IPOs) for small and medium-sized companies, according to Sebi's chief, Tuhin Kanta Pandey. Separately, Pandey revealed that the new system for determining the closing prices of the most actively traded securities is able to detect manipulation more quickly than the previous method.

During an industry event, Pandey pointed out that factors such as market making are increasing the expenses associated with small-company IPOs. He also mentioned that the current underwriting system is not functioning effectively, causing companies to incur significant costs.

Sebi has established a working group to investigate matters pertaining to the Small and Medium Enterprises (SME) platform. This group recently submitted its report to the regulator. Sebi is expected to release a consultation paper regarding the SME platform in the near future. Pandey emphasized the importance of not allowing SME platform participants to bear higher costs, noting that such costs are substantially higher than those on the mainboard.

Pandey also mentioned that raising the trading lot size and application size in an attempt to limit retail participation has not achieved the desired outcome. Sebi is exploring ways to support global fund management activity originating from India. He indicated that changes to the portfolio management services regulation would facilitate trading from within the country.