SEBI plans additional disclosures for SME IPOs to curb price manipulation
The SME segment has experienced a surge in public offerings over the past year, with many receiving enthusiastic responses from retail and non-institutional investors
Buch on Monday said if SEBI finds some malpractices the next step may be to issue a public consultation
Mumbai: Sebi chairperson Madhabi Puri Buch on Monday said the capital markets regulator is seeing "signs" of price manipulation in the Small and Medium Enterprises (SME) segment.
The manipulation is both at the Initial Public Offering (IPO) and also in trading, Buch said, advising caution to investors.
The Chairperson announced today that the regulatory body is gearing up to introduce further disclosures as an initial step towards addressing concerns related to small and medium enterprises (SME) Initial Public Offerings (IPOs).
In a statement, she expressed worry over instances of price manipulation seen in certain SME IPOs, both during their IPO launches and subsequent trading activities. She stressed the importance of heightened transparency and vigilance in the market to maintain integrity.
Buch highlighted SEBI's ongoing monitoring of price manipulation instances and reaffirmed the regulator's dedication to fostering fair and transparent practices in the IPO landscape.
"The SME segment has experienced a surge in public offerings over the past year, with many receiving enthusiastic responses from retail and non-institutional investors," Buch noted.
In the preceding year, the S&P BSE SME IPO index soared by an impressive 127%, surpassing the benchmark Sensex by a notable margin. Data from Trendlyne reveals that 40 companies have already debuted on the stock market this year, with 30 of them originating from the SME segment.
SEBI's heightened attention to the SME space was evident last year when the regulator extended the trade-for-trade settlement framework and short-term additional surveillance measure (ASM) to include SME stocks effective from October 3. This move was designed to combat potential price manipulation practices.
Buch also voiced concerns over the elevated valuations of small- and mid-cap stocks, alongside significant inflows into mutual funds targeting these segments. The regulator has urged asset management companies to develop a framework to monitor and manage these trends effectively.
The proposed additional disclosures for SME IPOs align with SEBI's commitment to fostering a fair and transparent market environment, safeguarding investor interests, and maintaining the integrity of India's capital markets.