A new platform is staged for trading in shares of small and medium enterprises (SMEs) by the National Stock Exchange (NSE). The online SME platform is supposed to be created by January 2011 complete with all features.
Earlier in November 2009, Securities and Exchange Board of India (Sebi), has laid out norms for the setting of SME platform. Bombay Stock Exchange and MCX-SX are among the other regulatory bodies that have supported creation of the exchange platform for small companies. With the making of this platform, the SME segment at NSE will have multiple trading sessions instead of one continuous trading session unlike the cash market that opens at 9 am and closes at 3.30 pm.
The platform will depend on several sessions in a day. So, the idea is to compile stop-start sessions so as to build in liquidity. Hence, trading becomes more active and viable. According to a source, “The platform is being built on the lines of pre-open session in the cash market, with the difference that it will have 4-5 such sessions in a day.”
Liquidity issue is also be defined by a market maker that gives the buy and sell quotes so as to facilitate trade. The idea is to provide two-way quotes for 75% of the time till the platform stays open. In fact, merchant bankers have been summoned to involve in ‘market-making’ for minimum three years. They can also involve nominated investors like venture capitalist, private equity fund, a qualified institutional buyer or high net worth individual.
On stabilizing the trading session, plans are that the SME segment will be merged with the cash market. The SME segment platform is developed on the NEAT (National Exchange for Automated Trading) Plus software. A team of software professionals from NSE developed the front end and the back end is created by NSE’s partner, Tata Consultancy Services.
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to