The Securities and Exchange Board of India's (SEBI) recent measures including peak margins and surveillance have effectively curbed speculation on National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) stocks. However, Small and Medium Enterprises (SME) platforms have seen a surge in unchecked speculation, as reported on Thursday.
Stock exchanges are now implementing the Additional Surveillance Measure (ASM) and trade-for-trade settlement on these SME platforms. This move aims to protect retail investors from Initial Public Offering (IPO) frenzies like the one witnessed during Kahan Packaging (NYSE: PKG )'s record-breaking subscriptions.
The BSE SME IPO index and NSE Emerge index have experienced significant growth, boasting high Price to Earnings (PE) ratios compared to the Nifty50 PE. This rapid growth has raised concerns about the potential risks for retail investors.
In response to these concerns, there have been suggestions to raise the minimum subscription and trading lot size on SME platforms. This strategy is expected to maintain positive net worth and operating profits without the need for scrutiny of offer documents. The implementation of such measures could provide an additional layer of protection for retail investors, mitigating the risks associated with unchecked speculation.
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