‘SME exchange likely in 2008’

A stock exchange exclusively for small and medium enterprises...

A stock exchange exclusively for small and medium enterprises (SMEs) is likely to become a reality this year, giving them better exposure to the investment environment.

“We will put in place an SME exchange. It will hopefully happen in 2008,” Securities and Exchange Board of India (Sebi) chairman M Damodaran said today. However, he added that the regulator would not like fragmentation and would not want more than one SME exchange.

The capital market regulator had earlier in last October cleared the proposal for an SME exchange in its board meeting. Damodaran told a FICCI-organised meet on capital markets here today that a large number of regional stock exchanges had come up with proposals to start the exchange for SMEs.

However, it is not clear which exchange would be allowed to set up a separate exchange. “We are not sure whether they are the right candidates. We will look at those capable of putting up the new exchange,” he said. He indicated he has not taken a view on which exchange be allowed to start an SME exchange.

Market experts said the proposed SME stock exchange should not be allowed to lower regulatory standards, keeping in mind the “vanishing companies of 1990s”. “We cannot forget that (vanishing companies). We do not want a replication (through the SME exchange),” Damodaran said.

Also selling proposition of the proposed exchange would not be regulatory arbitrage, even while giving a platform for SMEs to graduate into big companies.