Race begins to set up exchanges

The stage is all set for a battle among stock exchanges for setting up separate exchanges for small and medium enterprises (SME) as they top bourses.

The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) are battling to increase their market share by expanding into newer segments.

Apart from NSE and BSE, others in the fray for launching a small and medium enterprises (SME) platform are the Over-the-Counter Exchange of India (OTCEI), the Inter-connected Stock Exchange and Financial Technologies.

OTCEI's, the first exchange conceived exclusively for the SME sector,effort has not taken off, despite at least two attempts to revive the platform.

Financial institutions SU-UTI, ICICI, IDBI and Life Insurance Corporation of India are the promoters of OTCEI. It is likely that SU-UTI, which owns more than 20 per cent stake in OTCEI, may sell off its stake to interested parties, preferably to some companies which are keen to revive the exchange.

Inter-connected Stock Exchange is a trading platform created by 13 regional stock exchanges. Financial Technologies, the promoter of commodities exchange MCX, proposes to enter the segment in partnership with SIDBI, the state-run lender for SMEs.

BSE, which recently sold 5 per cent stake each to Deutsche and Singapore exchanges, is looking to bring the latest technology for setting up a robust SME platform for the small-scale sector to raise capital to meet their expansion requirements. Similarly, NSE, which till now kept away smaller companies, is toying with an idea of creating a separate platform for the SME sector.

Currently, only those companies with a minimum paid up capital of Rs 10 crore and a market capitalisation of Rs 25 crore or above are eligible to list on the NSE. In comparison, companies with a post issue capital of Rs 3 crore and a minimum market cap of Rs 5 crore are eligible to list on the BSE.

When asked about the competition for a SME platform, a senior Sebi official said: "We are not here to reject anyone's proposal. As and when their infrastructure is in place and they are ready for it, we would give our approval. It is for the market to determine who would be a success."

Market players opine that the contribution of the SME sector in terms of exports, manufacturing and employment is great. A proper platform for them to raise capital and get listed would further help the SMEs to come into focus.

"Once these entities grow into the next level, they can get listed on the main stock exchanges of BSE and NSE," said a market player.

SMALL IS BEAUTIFUL

Apart from NSE and BSE, others in the fray for launching a small and medium enterprises (SME) platform are the Over-the-Counter Exchange of India (OTCEI), the Inter-connected Stock Exchange and Financial Technologies

BSE is looking to bring the latest technology for setting up a robust SME platform