SEBI Unveils Major IPO Rule Review to Slash Costs and Boost SME Market Access
The Securities and Exchange Board of India (SEBI) has announced a comprehensive review of its rules governing Initial Public Offerings (IPOs) specifically for small and medium companies. This move aims directly at reducing the financial burden faced by these enterprises, which have found market access significantly more expensive than those listing on the mainboard.Tuhin Kanta Pandey, Chief Executive Officer of SEBI, stated that industry events are being utilized to address the operational challenges currently facing smaller issuers. He emphasized that various aspects, including market making and the underwriting system, are contributing unnecessarily high costs to these SME IPOs.
##Addressing Cost Barriers in SME Offerings
A key focus of the review is the disproportionate cost structure observed in SME IPOs compared to offerings on the mainboard. The working group established by SEBI to examine issues related to the SME platform has recently submitted its detailed report to the regulator.
Pandey confirmed that Sebi will be issuing a consultation paper soon following this internal review process. The regulatory body aims to streamline these processes to ensure that companies utilizing the SME platform do not incur excessive operational costs.
##Strengthening Market Integrity and Trading Oversight
Beyond SME specific reforms, SEBI is actively enhancing market integrity through updated trading mechanisms. Pandey noted that the newly implemented system for determining the closing prices of frequently traded securities is significantly more effective at detecting manipulation compared to previous methods.
The regulator also addressed measures taken recently to curb retail participation in certain trades. However, he disclosed that increasing the trading lot size and application size had not successfully achieved the intended objective of controlling retail involvement.
##Future Focus on Global Fund Management
SEBI’s regulatory scope is expanding beyond domestic IPO procedures. The board is actively looking at methods to support global fund management activity originating from India.
Changes are being considered for portfolio management services regulations. These adjustments, if implemented, would enable greater trading flexibility and international oversight capabilities from onshore Indian entities, adding a new layer of focus to the regulatory agenda.
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