The Securities and Exchange Board of India (SEBI) is expected to hold a crucial board meeting today, 18th December 2024, to discuss significant regulatory reforms, including tightening regulations for small and medium enterprise (SME) IPO listings and expanding insider trading norms, sources told ET Now.
SME Listing
One of the key areas of focus is the SME listing framework. SEBI is considering reforms to enhance transparency and investor protection in this segment. Suggestions received in response to SEBI’s November 2024 consultation paper include increasing the minimum application size from the current Rs 1,00,000 to either Rs 2,00,000 or Rs 4,00,000 and introducing a draw-of-lots methodology for High Net-Worth Individuals (HNI) or Non-Institutional Investors (NII).Additionally, the NII category may be segmented into small and large investors. To limit promoter exits, the Offer for Sale (OFS) portion might be capped at 20%-25% of the total issue size, while the minimum number of allottees could be increased to 200 from the existing 50. These measures are aimed at making the SME listing process more robust and investor-friendly.
Insider Trading
Another important topic on the agenda is the potential expansion of insider trading regulations. SEBI is exploring the inclusion of additional categories under Unpublished Price Sensitive Information (UPSI) to address evolving market dynamics. This could include company ratings changes, proposed fundraising activities, agreements impacting management control, evidence of company fraud, and changes in Key Managerial Personnel (KMP). These additions aim to strengthen the regulatory framework and mitigate risks associated with insider trading.Also Read: Hot Stocks: 3 stocks that may give returns between 19-39%
The meeting will also address the regulation of specified digital platforms (SPFs). SEBI had earlier proposed a framework through which a digital platform can hope to be recognised as an SPF. The framework includes various requirements that the platform has to meet, such as the ability to take specific preventive and curative measures, a policy to work in collaboration with SEBI, and a policy on transparency and accountability including a policy to submit periodic reports to the regulator on information on the identification and action taken by the platform related to frauds, impersonation and so on.In this Board meeting, the regulator could present this framework for consideration too. Any progress on this front will be highly awaited both by brokerages and content creators or finfluencers.
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