Dr C. Rangarajan, (left) Chairman, Economic Advisory Council to Prime Minister, and C.B. Bhave, Chairman, SEBI

Staff Reporter | 05 May, 2008
The Securities and Exchange Board of India will conclude the consultation process for a separate SME Exchange by end May and then present the draft before the SEBI Board for final clearance, SEBI Chairman C B Bhave said.

"SEBI is looking at setting up an SME exchange and consultations have been going on for the last two months. We will close the consultative window some time around end-May," Bhave said at an Small and Medium Enterprises conference in Mumbai.

"The feedback from the consultative process will be forwarded to the SEBI Board for a final decision," he added.

Listing the various issues under discussion, Bhave said there was a suggestion of appointing nominated advisors to provide comfort to investors about the credibility of the SME proposing to raise funds from the exchange.

"About 5-10 investment bankers, who have deep pockets and good processes could be entitled to act as nominated advisors," he said.

The Sebi chairman said the biggest challenge before the market regulator was to balance the demand of the issuers and safeguarding the interest of investors.

He said the SMEs have demanded a reduction in the high cost of transactions and regulatory compliance. "Can we make the ticket-size sufficiently high so that only the well-off investors can invest in it (SMEs)? A large ticket-size will ensure that small investors don't burn their fingers,"he said.

Bhave said there was also a demand to make the process of raising capital less expensive. "If the ticket-size is higher, the issue could be introduced on the Internet," he said, adding the Sebi had yet to take a view on these suggestions.

He underlined the importance of financial information in all equity markets. "While the compliance can have a light regulatory touch, the financial information should follow the same discipline as any other exchange," Bhave added.