Pakistan Stock Exchange (PSX), with the approval of the Securities and Exchange Commission of Pakistan, has significantly eased the requirements for eligibility of accredited individual investors investing in companies on the GEM Board.
As per the new definition, accredited investors include those individual investors who have assets of at least Rs 5 million which include but are not limited to value of securities held by these investors in respective Central Depository Company (CDC) investor account or sub-account.
With the revised eligibility criterion, total assets of investors are to be considered to assess their eligibility to invest on GEM Board companies, according to a press statement issued by PSX.
To elaborate, real estate properties, vehicles and other assets can also be included to define the assets of the accredited investors, it said adding by virtue of this amendment in the eligibility requirement of accredited individual investors, more investors will be able to participate in the pre-listing process of companies to be listed on the GEM Board.
This amendment will also lead to broaden the investor base in trading of shares of GEM Board companies at PSX, generating increased liquidity and higher share volumes.
Accredited investors will now self-declare to the Securities Brokers that they hold assets of at least Rs 5 million in order to be eligible to participate in listing of GEM Board companies or in their post-listing trading activity and also understand the risks associated with GEM Board and GEM companies.
Apart from the regulatory change, PSX has also notified the modes of acceptance of self-declaration by the Securities Brokers. Auto-marking of individual investors taking part through e-IPO in GEM primary market has been announced as well.
Moreover, the Securities Brokers can unmark an investor in NCSS of NCCPL if they have reason to believe that the investor is ineligible to trade on GEM, based on their KYC/ CDD checks.
The Securities Brokers will allow such ineligible investors to liquidate their GEM shares with no bearing on the Securities Brokers. These steps will lead to convenience in terms of operational practices of Securities Brokers.—APP
