- BSE is using AI agents to scan through the hundreds of SME IPO filings it gets every month
- The focus on SME IPOs is because they’re relatively less regulated, and has seen a boom in the past few years
- Scanning through documents may be low-hanging fruits; the future may see agents recording and monitoring calls, among other use cases
- With exchanges gearing to welcome more DRHPs in the coming months, more tasks may be in store for the AI mill
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The BSE has turned over a new leaf.
After reviewing PDF after PDF, reading lines and more from the initial public offering (IPO) documents filed by thousands of companies, the exchange has finally adopted technology.
In the last three months, about 75 small and medium enterprises (SMEs) have filed their draft red herring prospectus (DRHP) with the exchange, Sundararaman Ramamurthy, BSE’s managing director and chief executive, told The Ken in a telephonic conversation. To scan through all of them for anomalies, the BSE (formerly the Bombay Stock Exchange) is utilising AI tools.
Why? Because time matters.
The bourse, which employs about 500 people, earlier spent about two to three weeks manually processing each DRHP. With AI tools, that’s come down to 30–40 minutes. BSE refused to divulge further details about the tools.
But BSE isn’t the pioneer. For several months now, market regulator Sebi has also been
To see how it would hypothetically work, The Ken fed ChatGPT with the DRHP of Trafiksol ITS Technologies, an SME company focused on engineering, procurement, and construction that applied for a BSE listing in 2024. In the prompt, we asked if the IPO would be greenlit based on a) how frequently its CXOs changed, b) if its profits or revenues had improved dramatically in the 6–12 months before IPO, and c) if its statutory auditors changed every year or every few quarters.
These are also the criteria that BSE uses for its tools to do due diligence on SME companies applying for an IPO, Ramamurthy said.
Within 30 seconds, the chatbot replied:
“Sebi is likely to scrutinise: a) the frequent senior management changes, b) the sudden profit/revenue spike, and c) the pattern of changing statutory auditors. These elements could delay the IPO process or require additional disclosures and explanations. If Sebi finds material concerns, it could withhold the observation letter (essentially freezing the IPO) until satisfactory clarifications are provided.”
The regulator did, in fact, find “material concerns”.
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