SEBI announces framework regulations for SME stock exchange

06 November 2008

Stock market regulator Securities and Exchange Board of India (SEBI) has released framework regulations for setting up a dedicated stock exchange for the small and medium enterprise (SME) sector.

The SME exchange would be set up using existing stock exchange platforms or as new stock exchange after obtaining due recognition under the Securities Contracts (Regulation) Act – 1956 (SCRA), the regulator said in a release.

The proposed SME stock exchange would be set up as a corporatised entity. It will be a demutualised entity and will comply with the Securities Contracts (Regulation) (Manner of Increasing and Maintaining Public Shareholding in Recognised Stock Exchanges) Regulations, 2006 within a specified period (1-2 years) from the date of commencement of trading, the SEBI release said.

For recognition by the Sebi, the exchange should have a balance sheet networth of at least Rs100 crore. All trading members of the SME exchange shall register themselves with the exchange and SEBI.

The exchange will have nationwide trading terminals and an online screen-based trading system, which also has a suitable `Business Continuity Plan', including a disaster recovery site.

The exchange will have online surveillance capability to monitor positions, prices and volumes in real time so as to check market manipulation and will have adequate inspection capability.