NSE's New Regulations to Address Market Manipulation

In response to the manipulative practices in SME IPOs, the National Stock Exchange has implemented stricter regulations aimed at ensuring only financially stable companies can access the public market. Under the new requirements, companies must demonstrate positive free cash flow for at least two of the last three years to qualify for an IPO. This rule, however, may inadvertently exclude innovative SMEs that are investing heavily for future growth but currently operating at a loss. Additionally, a 90% cap on the opening share price compared to the issue price has been introduced to minimize extreme price fluctuations, despite potential drawbacks in limiting market dynamics and creating opportunities for manipulation.