SEBI chief Madhabi Puri Buch said that the regulator attempted to provide a listing environment for SMEs that is more facilitative, and thus less regulated than listing for the mainboard.
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Securities and Exchange Board of India (SEBI) chief Madhabi Puri Buch on Monday said that the market regulator has noticed signs of manipulation in the SME segment.
Speaking on the sidelines of an Association of Mutual Funds (AMFI) event felicitating women fund managers in Mumbai, Buch said besides the technology to identify patterns that suggest manipulation, the regulator has also received feedback from market participants on how such fraudulent activity can be identified and how they can be dealt with.
Despite these inputs, action is pending because the regulator is trying to construct a case in a robust manner.
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She highlighted that the regulator attempted to provide a listing environment for SMEs that is more facilitative, and thus less regulated than listing for the mainboard.
This is because SMEs may find it hard to comply with many of those requirements that are there for the mainboard companies, she said.
However, the market regulator received feedback about some entities misusing this facilitative framework.
To mitigate that, the first step that SEBI took was applying measures like Additional Surveillance Measure (ASM) and Graded Surveillance Measure (GSM), which earlier were not applicable on the SME board.
These are relatively small entities, where the market cap and free float is small, and therefore their prices are relatively easier to manipulate both at the IPO level and at the trading level, she noted.
Buch highlighted the need for more disclosure in terms of risk factors, and said the regulator is looking to implement disclosures as a starting step with respect to SME IPOs.
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