NSE Caps SME IPO Listing Gains At 90% Over Issue Price, Issues Circular

Introducing a new price control mechanism, the National Stock Exchange (NSE) on Thursday said it has decided to impose a price control cap of 90% over the issue price for SME IPOs during the special pre-open session. It comes into effect from today, July 4, 2024.

“To standardise the opening price discovery/ equilibrium price across exchanges during special pre-open session for initial public offer (IPO) for the SME platform, it has been decided to put an overall capping up to 90% over the Issue price for SME IPOs,” NSE said in a circular.

The circular will come into force with immediate effect i.e. July 4, 2024.

The price control cap of 90 per cent shall be applicable only to the SME segment and not for mainboard IPOs, relisted securities, and public debt, the NSE stated.

According to a market expert, “This move by the NSE is a step towards ensuring stability in the SME IPO market. The 90% cap will help prevent excessive speculative activity and provide a more transparent pricing mechanism.”

Key Highlights of NSE’s New Circular:

90% Price Cap: The new regulation imposes a maximum cap of 90% over the issue price specifically for SME IPOs during the special pre-open session.

Applicability: This price control measure is exclusive to the SME segment and does not affect Mainboard IPOs, relisted securities, or public debt offerings.

Immediate Implementation: The circular comes into force with immediate effect from July 4, 2024.