The Securities and Exchange Board of India (Sebi) is considering an overhaul of rules governing the small and medium enterprise (SME) market, focusing on easing restrictions that limit listings and improving share liquidity. The regulator aims to address costly market-making frameworks and trading rules that hinder investors from easily selling shares, according to livemint.com.
Sebi's review targets the current market-making framework, which has struggled to provide sufficient liquidity while imposing additional costs on companies. The regulator is also examining trading rules that result in investors holding illiquid odd lots. These changes come as Sebi seeks to make SME shares easier to trade and reduce the financial burden on listed companies, the report said.
The SME market in India has faced challenges with liquidity and high costs associated with market-making, impacting investor participation and company valuations. By revising these rules, Sebi aims to enhance market efficiency and attract more listings in the SME segment. The move aligns with broader efforts to strengthen capital markets and support smaller enterprises in accessing funding.
Sebi chairman Tuhin Kanta Pandey has been involved in steering these regulatory changes. The regulator's proposals are under discussion and may lead to formal announcements soon, as per livemint.com. The next steps will determine how these reforms reshape SME trading dynamics in India.