Mid-cap, small-cap and now get used to the world of micro-cap. The Securities and Exchange Board of India (SEBI) board has recently approved a proposal for setting up an exchange dedicated to Small and Medium Enterprises (SMEs) which would allow them better access to risk capital.

"The board has cleared the proposal to have a separate exchange. Consequent to the board's decision, a policy framework will soon be announced and persons interested in setting up an SME exchange would be invited to come forward with their proposals," Sebi chairman M Damodaran said at a press conference on Thursday.

"Thereafter, one of the proposals among them, subject to eligibility criteria, will be approved for setting up the exchange," he said.

The SEBI proposal is aimed at promoting the country's SME segment comprising several unlisted companies belonging to different sectors, feel brokers. Globally, this concept of SME exchange is already being implemented successfully. London Stock Exchange's Alternative Investment Market (AIM) has succeeded in attracting a large number of small-sized companies globally, including a few Indian ones.

"SEBI proposal will ensure that smaller companies now seeking to raise capital can access the capital market directly rather than be at the mercy of private equity players. This will be so provided the listing norms are less stringent than currently imposed by BSE and NSE," said Churiwala Securities director Alok Churiwala. He also said the proposal would give a significant boost to entrepreneurial talent in the country and would spur a new wave of companies which may go up to become blue chip companies of tomorrow.

While some favour the SEBI move, there are others who think the current infrastructure of existing stock exchanges can efficiently be used for promoting SMEs. "It does not make sense to create a new exchange for SMEs when stock exchanges like BSE are already offering good trading facilities through its Indonext platform," said an ex-BSE president.

Tradeindia News Bureau

(Tradeindia Expert)

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