Stock exchanges are faced with the challenge to attract firms to their trading platform. The responsibility is to list firms on trading platforms. But the biggest obstacle faced seems to be lack of support from merchant bankers that may result in problems for the platform’s success.

The eligibility criteria for companies to be listed on SME trading platform is a minimum of 10 to 25 crore assets. For merchant bankers it is risky affair to handle SME issues. The reason is SEBI has mandated investment bankers to facilitate market-making for three years period. They can do this by providing quotes for 75% of total market time.

It is compulsory that listing of SMEs has to be 100% underwritten, with 15 % on investment banker’s own account. A rule has also been made that for three years, no stock exchange member or broker will commit to market making. So, the responsibility to get SMEs listed on the exchange is back on the shoulders of merchant bankers.

SEBI has already allowed BSE to start a SME platform while NSE and MCX-SX are yet to get approvals. SME operations are going to begin full-fledged within 12 weeks. Merchant bankers find the fees too low and the three-year market-making rule too compelling. However, BSE is doing its best to woo companies to be listed on the exchange but then bankers are still skeptical.