SEBI is set to introduce new proposals for oversight in initial public offerings of small and medium enterprises, Whole Time Member Ashwani Bhatia has reiterated.
Bhatia, while speaking at the Morningstar Investors Conference, expressed concern over the increasing participation of retail investors in SME IPOs, highlighting the potential risks involved. The paper to deal with the issues may come out this month itself, he said.
"Many investors may not fully grasp the complexities and risks associated with these offerings," he said, while talking about enhancing investor education to mitigate uninformed investment decisions, as is possible in SME IPOs.
This is not the first time that the Securities and Exchange Board of India has mentioned its plans to bring more scrutiny into the SME IPOs. As reported earlier, SEBI had launched probe into more than 12 merchant banks over due diligence in SME IPO.
The regulator is vigilant in monitoring SME listings to prevent incidents of price manipulation and fraud, with plans to release a discussion paper on SME IPOs very soon. Bhatia urged retail investors to exercise caution when considering investments in this sector.
In addition to SME IPO oversight, SEBI is focused on improving financial literacy and investor protection across the country. The regulator has been conducting targeted education programs aimed at diverse demographics, including students, women, and rural populations. As of March 2024, SEBI boasts approximately 400 certified Securities Market Trainers and aims to increase this number significantly to meet the needs of the vast Indian population.
Bhatia also addressed the challenges within the derivatives market, noting that while India leads globally in Futures and Options trading volumes, 93% of retail investors suffer losses in this segment.
To protect retail savings, SEBI is discouraging the notion of F&O trading as a "national pastime". The regulator is implementing new rules, including stricter margin requirements, larger contract sizes, and enhanced upfront premium collection, along with clearer risk disclosures for retail investors.
On the bond market front, SEBI is actively working to expand participation and enhance transparency in bond issuances. Notably, retail participation in the bond market has surged, with Rs 8.6 lakh crore raised in the fiscal 2024.
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