Stock market for SMEs launched

Finance minister P Chidambaram launched Indonext, a trading platform for shares of small and medium-sized enteprises (SMEs) and a joint initiative of the Bombay Stock Exchange (BSE) and the Federation of Indian Stock Exchanges.

Chidambaram said SMEs on this exchange could become leaders in the futures and global markets. "Indonext would be a real platform for entrepreneurs in the SME sector. The segment is creating millions of jobs and companies in this sector can become winners by replacing the current market leaders," he said.

The capital of the companies wishing to trade on Indonext should be between Rs 3 crore and Rs 20 crore.

Chidambaram pointed out that ninety per cent of the research by large brokerages was focussed on the top 50 companies.

"I am sure that these small companies do not figure anywhere in brokerage research reports." He pointed out that current corporate leaders were non-entities even 15 years ago.

The finance minister said liquidity is a severe problem for SME stocks on regional exchanges. "Even venture capital funds are ignoring the SMEs as they would not have exit option due to poor liquidity. So, capital market for SMEs need to be encouraged." Currently, 18 regional stock exchanges are part of Indonext.

Meanwhile, Rajnikant Patel, executive director and chief executive of the BSE, said the SMEs can raise capital, list their shares on the exchange of their region, and trade through the BSE online trading terminals.