BSE said to push for tighter scrutiny of SME listings: Report

The move is an attempt to improve standards in a segment of India’s booming IPO market that has attracted a surge of retail investment, while also alarming regulators. Bloomberg

Stock exchange operator BSE Ltd. has told bankers to increase their oversight of the initial public offering applications of small companies, after the exchange found discrepancies in the filing documents of some recent deals, according to people familiar with the matter.

Sundararaman Ramamurthy, BSE’s chief executive, told bankers on Tuesday to ensure IPO hopefuls aren’t inflating their numbers, the people said, requesting not to be named because they aren’t authorized to discuss the meeting. He also asked bankers to put more effort into assessing potential listing candidates in-person, including visiting company premises, they said.

The move is an attempt to improve standards in a segment of India’s booming IPO market that has attracted a surge of retail investment, while also alarming regulators. India’s market regulator said in August that investors should exercise caution when buying shares of SMEs, adding that some companies and their majority stakeholders had misrepresented their operations.

A spokesman at BSE Ltd. didn’t immediately respond to emailed queries on the discussions

BSE Ltd., operator of the Bombay Stock Exchange, and its larger rival the National Stock Exchange of India Ltd., both run listing platforms for very small companies. Demand for these deals has boomed in recent years, alongside a wider market rally, with some new listings seeing oversubscription up to 400 times.

Earlier this month, Bloomberg News reported that India’s securities regulator is considering tighter oversight of micro-cap firms going public. Likely measures include monitoring the use of their funds and imposing stricter due diligence guidelines for bankers.