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Guidelines for Listing

SEBI has time to time issued the circulars and guidelines for setting up of the exchange for small and medium enterprises. These circulars have been revised after taking suggestions from market participants for the SME Platform. The final circular was issued on 18th May, 2010.The necessary provisions for the listing of specified securities under the SME Platform have been made in the Chapter XA of Issue of Capital and Disclosure Requirements (ICDR).

The guidelines emphasis on the following :
  1. The post issue face value capital should not exceed Rupees Twenty Five Crores.
  2. The minimum application and trading lot size shall not be less than Rs. 1, 00,000/-
  3. The existing members would be eligible to participate in SME Platform.
  4. The issues shall be 100% underwritten and merchant bankers shall underwrite 15% in their own account.
SEBI has compulsorily mandated market making for all scrips listed and traded on SME Platform.

The obligations for market makers are as follows :
  1. The merchant bankers to the issue will undertake market making through a stock broker who is registered as market maker with the SME Platform.
  2. The merchant bankers shall be responsible for market making for a minimum period of 3 years.
  3. The market makers are required to provide two way quote for 75% of the time in a day. The same shall be monitored by the exchange.
  4. There will not be more than 5 market makers for a scrip.
  5. Market makers will compete with other market makers for better price discovery.
  6. The exchange shall prescribe the minimum spread between the bid and ask price.
  7.  During the compulsory market making period, the promoter holding shall not be eligible for the offering to market makers.
  8. Market Maker shall be allowed to deregister by giving one month notice to the exchange.
  9. Trading system may be either order driven or quote driven.
  10. The application and trading lot size is being kept at Rs. 1, 00,000/- so as to curtail the entry of retail investors. It has also been stated that the minimum depth shall be of one lakh rupees and at any point of time it can not go below that amount. The investors holding with value less than Rs. 1, 00,000/- shall be allowed to offer their holding to the market maker in one lot. However, in functionality the market lot will be subject to revival after a stipulated time.

Also Read:- Benefits of Listing