NEW DELHI: The Securities and Exchange Board of India (Sebi) on Monday said it has noticed signs of manipulation in the SME segment. The manipulation is seen in the Initial Public Offering (IPO) of small and medium enterprises (SMEs) as well as in their trading.
“We do see the signs (of price manipulation), we have the technology to do it. We are able to see certain patterns. I’d say it is still on the kitchen table, it’s not yet gone into the oven,” said SEBI Chairperson Madhabi Puri Buch on Tuesday in Mumbai.
Buch noted that Sebi has received feedback that some entities are misusing the SME listing platforms as the small offerings are easier to manipulate. She added that they are still working with advisors to understand all the dimensions and analyse the data. If the regulator finds some malpractices the next step may be to issue a public consultation on it.
Buch said the investors need to understand that the SME segment is different from the main board and it is necessary for the capital market regulator to underline the same in terms of the rules on disclosures which are made to investors. For the small and medium enterprises segment, the regulator wants to have a listing environment which is not as regulated as the main board as small and medium enterprises find it difficult to comply.
In recent times, Sebi has increased scrutiny of market participants. On Thursday, Sebi in an interim order noted severe irregularities in the way JM Financial, an NBFC, was conducting its business in the initial public offering as well as debt market and barred the company from taking any new mandate for acting as a lead manager for any public issue of debt securities.
In the interim order, SEBI also said that is separately examining an issue in the SME segment of the National Stock Exchange wherein it was observed that certain entities placed huge bids under the high-net-worth individuals (HNIs) category and subsequently also placed bids under the retail category. This resulted in the issue being oversubscribed but the bids were rejected as multiple applications were made from the same PAN.
Buch also said that the capital market regulator will begin the T+0 trade cycle settlement on an optional basis by March 28. At present, Indian stock market operates on a T+1 settlement cycle for all scrips.
‘Working with advisors to understand dimensions’
Bunch noted that Sebi has received feedback that some entities are misusing the SME listing platforms as the small offerings are easier to manipulate. She added that they are still working with advisors to understand all the dimensions and analyse the data. If the regulator finds some malpractices the next step may be to issue a public consultation on it.