Shreni Shares Must Quote Two Ways for Three Years on BSE SME

Shreni Shares Limited, referred to here as Shreni Shares, is initially the sole market maker for the issuer’s BSE SME equity shares and must issue eligible two-way quotes for 75% of normal-market time. The August 14, 2026 agreement requires market making for at least three years from listing and reserves up to 2.80 lakh shares for the function.

What does Shreni Shares have to do on BSE SME?

Shreni Shares must provide eligible two-way quotes, meaning quoted buy and sell prices, for 75% of market time in every normal-market trading session from the listing date. BSE will monitor that requirement, and Shreni Shares must inform BSE in advance of every “black cut period” when it is not issuing quotes. The compulsory arrangement runs for a minimum of three years from listing, unless an amendment to the Securities and Exchange Board of India (SEBI) Issue of Capital and Disclosure Requirements Regulations changes the period.

Shreni Shares must guarantee execution at the price and quantity in its quotes. Each quote must have minimum depth of Rs 1,000, which is the minimum value available at the quoted price, until BSE revises that amount. Investors whose holding is worth less than Rs 1 lakh may sell their entire holding to the market maker in one lot, provided they submit the required declaration to their selling broker.

The proposed permitted spread varies with the market-price slab, rather than remaining fixed across all share prices. The spread is expressed as a percentage of the sale price, and the prospectus sets a narrower percentage for prices above Rs 100 than for prices of up to Rs 50.

How does the 5% reservation support Shreni Shares’ quote obligation?

The issuer must allot at least 5% of the issue to Shreni Shares under the Market Maker Reservation Portion, in line with Regulation 261(4) of the SEBI regulations. The reservation is up to 2.80 lakh equity shares within an issue of up to 55.50 lakh shares, while the net issue to the public is up to 52.70 lakh shares. The reserved shares are therefore part of the disclosed issue structure rather than an additional allotment outside the issue.

The offer document does not state the issue price in the supplied pages, so it does not provide a final rupee value for the 2.80 lakh-share reservation. It also says the minimum quote depth based on the IPO price and minimum lot size will be revised by BSE, but leaves those price-dependent figures blank. Shreni Shares must separately confirm it has sufficient net worth to discharge its market-making obligations under BSE Circular No. 20190718-28 dated July 18, 2019.

The arrangement is initially concentrated in one designated participant because Shreni Shares is the sole market maker at this stage. However, no more than five market makers may operate in the equity shares at any time. The issuer and Smart Horizon Capital Advisors Private Limited, the book running lead manager, may appoint replacement or additional market makers, subject to that five-market-maker limit and applicable rules.

When can Shreni Shares stop quoting?

Shreni Shares may be exempt from providing quotes after the first three months of the market-making period if its holding reaches 20% of the issue size. Once its holding reduces to 19% of the issue size, Shreni Shares must resume two-way quotes. The prospectus adds that shares allotted above an unspecified referenced quantity will not count in calculating the 20% threshold, because that referenced quantity remains blank in the supplied document.

There is no stated downside threshold for the arrangement. If Shreni Shares exhausts its inventory through market making, BSE may intimate SEBI after due verification. This differs from the 20% holding rule: a higher holding can create a stated exemption after three months, while inventory exhaustion triggers a possible exchange verification and regulator intimation rather than a percentage-based exemption.

Shreni Shares may also withdraw temporarily or fully in special circumstances, including system problems or other problems. Controllable reasons require BSE’s prior approval, while uncontrollable reasons do not require prior approval; BSE has final authority to decide whether a reason is controllable. Shreni Shares may terminate the agreement with one month’s notice or on mutually acceptable terms with Smart Horizon Capital Advisors.

How do BSE rules limit and enforce the arrangement?

BSE can impose monetary penalties and suspend market-making activities or trading membership if Shreni Shares does not issue two-way quotes for at least 75% of market time. BSE will monitor obligations in real time, while its Department of Surveillance and Supervision will decide and publish penalties, fines and suspensions for misconduct, manipulation or other irregularities. All market-making conditions remain subject to future SEBI and BSE regulations and guidelines.

During the compulsory market-making period, Shreni Shares cannot buy equity shares from promoters, promoter-group members, or persons who acquired shares from either group. The restriction separates market-making purchases from shares originating through the promoter chain. If Shreni Shares terminates before the compulsory period ends, Smart Horizon Capital Advisors must arrange a replacement market maker during the notice period and before Shreni Shares is released from its duties.

The shares will begin continuous trading when listed on BSE SME, following a 60-minute pre-opening call auction from 9:00 a.m. to 10:00 a.m. The first 45 minutes allow order entry, modification and cancellation, followed by 10 minutes for matching and trade confirmation and a five-minute transition buffer. The shares will remain in the trade-for-trade segment for 10 days from listing, and price circuits apply from the first day using the call-auction discovered price.

BSE SME will apply the margins used on the BSE Main Board, including mark-to-market, value-at-risk (VaR), extreme-loss, special-margin and base-minimum-capital requirements. Mark-to-market records changes in the value of open positions, while VaR is a margin framework for potential price movement. BSE may impose additional margins when it considers them necessary.

Conclusion

Shreni Shares’ three-year BSE SME role is a regulated liquidity mechanism rather than a commitment to any specific share price or trading volume. Its core requirements are two-way quotes for 75% of normal-market time, execution at quoted price and quantity, and minimum quote depth of Rs 1,000. The up to 2.80 lakh-share reservation supplies the stated initial allocation for that function within the up to 55.50 lakh-share issue.

The next disclosed points to watch are the listing date, BSE’s real-time monitoring of the 75% quote requirement and Shreni Shares’ holding after the initial three months. If Shreni Shares reaches 20% of the issue size, it may qualify for the stated exemption; if it serves one month’s termination notice before the three-year period ends, Smart Horizon Capital Advisors must arrange a replacement before its release.