'We see signs of manipulation in the SME segment,' says SEBI chairperson

According to the Sebi Chairperson, the regulator had attempted to provide a listing environment for SMEs that is more facilitative, and thus less regulated than listing for the mainboard. This is because SMEs may find it hard to comply with many of those requirements that are there for the mainboard companies.

She said, "The objective (of Sebi) was appropriate".

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However, the market regulator received feedbacks of some entities misusing this facilitative framework.

To mitigate that, the first step that SEBI took was applying measures like Additional Surveillance Measure (ASM) and Graded Surveillance Measure (GSM), which earlier were not applicable on the SME board.

Having said that, Buch believes the reality is that these are relatively small entities, where the market cap and free float is small, and therefore their prices are relatively easier to manipulate both at the IPO level and at the trading level.

To counter that, Buch stated the need for more disclosure in terms of risk factors. "(The regulator is) looking to implement disclosures as a starting step with respect to SME IPOs," Buch said.

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The SEBI chairperson also stated that the regulator is working to evidence the actual stock price manipulation at the IPO as well as trading level. "We are able to see certain patterns. However, as per our regulation, the way that we need to construct the entire case, we do need to take some time to do that in a robust manner," she said.

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