SEBI Seeing 'Pattern Of Price Manipulation' In SME IPOs, Says Madhabi Puri Buch

The Securities and Exchange Board of India is mulling additional disclosures due to patterns of manipulation in initial public offerings of small and medium enterprises, according to Chairperson Madhabi Puri Buch.

The markets regulator has received feedback that some entities are misusing the listing platforms for small and medium companies as these small offerings are easier to manipulate, Buch said at a media interaction in Mumbai.

"We do see patterns of price manipulation and certain patterns. The market has advised us on what to do to identify such cases and deal with them. We are still working with advisors to understand and analyse the data," she said.

"It is easy to manipulate both at IPO and subsequent stage. Some more disclosure in terms of risk factors is needed," she told reporters on Monday. 

The regulator desires to have a listing environment which is not as regulated as the main board, because small and medium enterprises find it hard to comply with many of those requirements, she said. "The objective is to protect and mitigate the risk of price manipulate."

Following the chairperson's comments, the S&P BSE SME IPO index fell 2.29% to 56,019.27 at 1:03 p.m.

The same day settlement or the T+0 settlement will be a reality by end of this month, followed by instant settlement by next March, Buch said.

"The proposal to have stock trades settle on the same day will go into effect on March 28, on optional basis for certain investors," she said.

The markets regulator had proposed implementation of T+0 settlement in two phases. In the first phase, the optional settlement cycle is proposed for trades until 1:30 p.m., whereas in the second phase, settlement may be implemented for trades until 3:30 p.m.