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SEBI issues guidelines on SME exchange
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SME Times News Bureau | 28 Apr, 2010
Market regulator Securities and Exchange Board of India (SEBI) on Tuesday issued guidelines for market makers on setting up stock exchanges exclusively for small and medium firms (SMEs).
As per the guidelines, market makers will have to seek registration from the stock exchange.
"Any member of the exchange would be eligible to act as market-maker provided the criteria laid down by the exchange are met," SEBI said.
SEBI also stated that the market maker will have to provide two-way quote for 75 percent of time in a day. The minimum depth of quote would be kept at Rs 1 lakh and execution of quotes must be guaranteed by the market maker.
"The minimum depth of the quote shall be Rs 1,00,000. However, investors with holdings of value less than Rs 1 lakh shall be allowed to offer their holding to the Market Maker," it said.
SEBI added that once registered as a Market Maker, one has to start providing quotes and act in that capacity for a period as mutually decided between the Merchant Banker and the market maker.
According to the market regulator, the exchange will be required to prescribe the maximum spread between bid and ask price.
"The exchange, may at its discretion also prescribe the price bands for the same. Further, in case of new issue the spread shall also be specified in the offer document with the prior approval of the exchange," added SEBI.
The much awaited SME exchange will help small enterprises that could not fulfill the trading requirements of the BSE and the NSE, and raise capital.
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