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The NSE along with the Small Industries Development Bank of India (Sidbi) is planning to set up this exchange and has received approvals from the Securities and Exchange Board (Sebi) last week. The SME Exchange will be a separate exchange within the NSE.
Earlier, the premier bourse BSE had received Sebi approval for its proposed SME Exchange on September 28. The BSE is likely to start operations next month.
The idea of SME exchange has been mooted as small and medium enterprises are not able to raise funds from primary market as investors are less inclined to invest in their issues along with the higher charges of listing. Also, scrips of many of the listed SME entities are illiquid due to poor volume.
The idea got rolling after a task-force set up by the Prime Minister`s Economic Advisory Council has recommended setting up such exclusive platforms for the SMEs. Globally, every major bourse has separate SME platforms.
The Finance Ministry has also asked the market regulator to consider reduction in the mandatory period prescribed for market-making from three years to six months to encourage liquidity, minimum trading lot and reduction in time period for initial public offering.
