India's Bombay Stock Exchange (BSE) has received an ”in principal' approval from regulator the Securities and Exchange Board of India (SEBI) to launch SME Exchange, which will list at small and medium enterprises (SMEs). The SME Exchange is expected to launch ”imminently', though the BSE declined to give an exact date.
The new SME Exchange is intended to provide a further boost in the BSE's attempts to reach out to SMEs. As the older of India's two major exchanges, the BSE already lists a far higher number of small- and mid-cap firms than its larger rival, the National Stock Exchange of India. As of May 2011, the BSE accounted for 20.4% of India's equity market capitalisation, while the NSE had 79.6%, according to data provided by Thomson Reuters.
Over the last six months, the BSE has been promoting awareness of its plans, stating that it hopes the venue will provide “access to capital, future financing opportunities, increased visibility among investors, venture capital and liquidity for shareholders”.
The initiative follows the introduction of delivery-based derivatives, smart order router technology and web-based IPO services and mobile trading at the BSE in the last 12 months, as well as the reduction of membership fees, by which the BSE claims to have signed up some 550 new members.
Competition between the BSE and NSE has been fierce on a variety of fronts, with the NSE forming a cross-listings agreement with US derivatives venue the Chicago Mercantile Exchange in March 2011. The BSE signed its own memorandum of understanding with Japan's Osaka Securities Exchange to explore cross-licensing of indices, in April 2011.