BSE SME Exchange, a platform for small and medium enterprises (SME) which was to be started in September, will likely have a delayed launch in October. Preliminary approvals came in May and June and only a final approval from the market regulator is awaited, said a top official of the exchange.

“After the final approval from the Sebi, which can even come in September, it will take another 30 to 40 days for the exchange to start operations,” said Lakshman Gugulothu, CEO of BSE SME Exchange.

There is a provision for both, previously unlisted companies and listed companies in small and midcap categories on Bombay Stock Exchange (BSE), to be listed on this new exchange. “Around 50 unlisted companies and 15-20 listed ones have already shown interest,” said Gugulothu.

There are over 26 million SMEs in India, of which one million have the potential to be listed on this exchange. Another 4,000 companies, which are already listed in small and midcap sections of BSE, can also join the new exchange. Out of these 4,000 companies, around 1,500 have share capital less than Rs 10 crore and remaining with share capital in the range Rs 10-25 crore.

FIIs are expected to play a significant role in SME Exchange. “FII interest is quite high. We are also conducting meetings with leading markets of the world to make them aware of the opportunities in the SME sector here,” said Gugulothu. “Many foreign companies are looking to hold stake in SMEs as it’s a good way to enter Indian market.”

Today, market making is quite risky and expensive and it is an issue which has dogged similar projects earlier like over the counter exchange. BSE is taking special note of it and already has around 25 market makers. “In 6 months, we will have around 50-60 market makers,” he said. A market maker accepts the risk of holding a certain number of shares of a particular security in order to facilitate trading in that security. Once an order is received, the market maker immediately sells from its own inventory or seeks an offsetting order. This process takes place in mere seconds.

BSE is also conducting nationwide seminars to spread awareness regarding SME Exchange.