KARACHI: The Pakistan Stock Exchange, Securities and Exchange Commission of Pakistan (SECP) and National Clearing Company of Pakistan Limited (NCCPL) are all aboard when it comes to making efforts to facilitate investors’ participation and trading at the Growth Enterprise Market’s (GEM) Board of PSX.
Recently, the SECP relaxed rules for securities brokers to verify eligibility of accredited individual investors for trading in a particular security or market by obtaining self-declaration or undertaking from them, acknowledging that they meet the criteria prescribed by the PSX regulations. This was done to develop the GEM market and generate adequate volumes in the secondary market.
In its recent notice, NCCPL has informed all clearing members that with reference to PSX Notice No. PSX/N-324 dated April 1, 2022 regarding approved amendments in PSX regulations pertaining to investor eligibility for trading in GEM, and pursuant to arrangement explained under point 7 of the aforementioned PSX circular and based on data provided by CDC, individual investors holding securities with CDC valuing at least 40 percent higher than the minimum net worth requirement of Rs 5 million prescribed for accredited investor have been auto-marked as accredited individual investors in UIN database of NCSS.
This means that a large number of PSX main board investors are now allowed to trade at GEM Board, which can result in huge participation by investors in day trading at GEM Board of PSX.
PSX wants more volumes in listed companies at the GEM Board. In the recent Supernet Listing at GEM Board, market witnessed increased level of interest among investors, manifested by better participation by mutual funds and individual investors. “These changes will definitely help in generating more interest and volumes in GEM market,” says a leading market participant.
Earlier, the accredited individual investors were required by the exchange rules to have assets of Rs 5 million (unlike Net Assets as defined previously) including but not limited to the value of securities held in respective CDC account, or sub-account, or any other criteria or threshold as may be specified by the PSX.
The SECP approved amendments to the PSX regulations in the context of the accredited investors and the notification on manner of verifying their eligibility for trading in the GEM has come into force from April 1.
The amendments change the clauses 4.29 and 5A.1.1 of the PSX Rule Book, empowering the exchange to notify the manner of verification of eligibility of the accredited investors by the securities brokers. The investors are now required to submit self-declaration in hard form, electronically, confirmed via any application that can be maintained as a log, any other recognised social media platform or agreeing to the self-declaration window by accepting, check-marking, acknowledging, etc.
Copyright Business Recorder, 2022
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