The platform is expected to offer a fresh, alternative asset class to investors. It will also allow early stage ventures and fundamentally-solid companies to raise growth capital and ultimately make the transition to the NSE’s main board. The first IPO on the Emerge platform will be an INR21-crore IPO by the Chennai-based Thejo Engineering, which can be subscribed to, beginning September 4.
What is an SME exchange?
An SME exchange is a type of stock market focused on the trading of the securities of small and medium enterprises (SMEs). This is advantageous to SMEs who do not meet the basic prerequisites of listing on main boards. SMEs, who naturally have less clout, struggle to attract enough trading volume on main exchanges.
There exist such SME exchanges around the world including – Alternative Investment Market (AIM) in the UK, Chinext in China, TSX Ventures in Canada, Growth Enterprise Market (GEM) in Hong Kong etc.
Want to list?
The SME platform of the NSE main board is open for SMEs with post issue paid up capital equal to or less than INR25 crore. The Securities and Exchange Board of India (SEBI) rules direct that SMEs can raise from INR5 lakh and up to INR5 crore. Companies whose post-issue capital has a face value of between INR50 lakh and INR10 crore can list on the platform.
Companies with post-issue capital exceeding INR10 crore but less than INR25 crore can choose to list on either the SME Exchange or the main board, while companies with capital of over INR25 crore need to list on the main board.
Any company that meets the prerequisites to list on the Capital Market (CM) segment of the NSE can list on the SME platform (provided it meets INR25 crore stipulation). No separate membership is required for trading on the SME platform.
The SME platform is a hybrid system which comprises of continuous order mechanism (normal market) as well as call auction mechanism. SME securities will be available either in call auction or continuous session at any point of time. Trading on the SME platform would be anonymous except for market maker quotes or transactions which would be identified distinctly with '#'.
Market timings for continuous and call auction markets are given below:
- Continuous Market: 9:15AM to 3.30PM
- Call auction Market: To start with, there would be one call auction session from 11:00AM to 12:00PM with random closure in the last five minutes. At the end of the call auction session, order matching would take place at the equilibrium price as explained above.
In terms of market parameters, lot sizes start from a price band below and upto INR14 with a lot size of 10,000 shares, all the way to a lot size of 100 for a price band above INR 1,000. Tick size will be INR0.05 and the price band will be 20 percent.