Sebi to review proposals on SME IPOs, insider trading rules and more at 18 Dec board meeting | Stock Market News
Source: Live Mint
The Securities and Exchange Board of India (Sebi) may approve proposals that will affect small and medium enterprises (SMEs), angel funds, and the broader securities market through IPO regulations, insider trading rules, and compliance for registered entities during its board meeting on 18 December.
Among the most highly anticipated changes is a proposed overhaul of rules governing SME IPOs. The regulator is likely to increase the minimum application size for such IPOs from ₹1 lakh to ₹2-4 lakh, thus limiting participation to more well-informed investors with a higher risk appetite.
Sebi’s proposal to double the minimum subscription amount is backed by a significant shift in the market. Since its original framework was introduced more than 14 years ago, the Nifty50 and Sensex have grown about 4.5 times. To tighten eligibility criteria, Sebi proposed that companies seeking listing must have an operating profit (earnings before interest and tax) of at least ₹3 crore in two of the previous three financial years. It also suggested mandating that shares issued in IPOs have a face value of ₹10 each for its issued capital and proposed new shares.
Changes to insider trading rules
The board is also expected to expand the definition of unpublished price-sensitive information (UPSI) under the Prohibition of Insider Trading (PIT) Regulations. This will include restructuring plans, one-time bank settlements, and other corporate decisions that could materially affect stock prices. Sebi’s proposal comes after a study revealed that companies often fail to classify all relevant corporate developments as UPSI, leading to gaps in compliance.
The regulator may consider its proposal to change the definition of UPSI, and to bring regulation 30 of the listing obligations and disclosure requirements (LODR) within its consultation document. Regulation 30 of LODR requires listed companies to disclose material events or information to the stock exchanges to ensure transparency and timely dissemination of information to investors.
To encourage more structured investments in startups, Sebi may approve a proposal to bring about sweeping changes to the regulatory framework governing angel funds under alternative investment funds (AIFs). These include limiting investments to accredited investors, reducing the minimum investment per startup from ₹25 lakh to ₹10 lakh, and halving the lock-in period from one year to six months.
Algo trading for retail investors
On Monday, Mint reported that Sebi has introduced a landmark proposal to allow retail investors participate in algorithmic (algo) trading—a domain traditionally dominated by institutional players. With advantages such as faster trade execution, enhanced risk management, and cost efficiency, algo trading has the potential to transform retail participation in India’s capital markets.
Open for public feedback until 3 January 2025, the proposal emphasises inclusivity while reinforcing market integrity through stringent safeguards.
