The Securities and Exchange Commission of Pakistan (SECP) is considering to allow direct listing of local companies on the Pakistan stock exchange(PSX), Bloomberg reported on Monday.
SECP Chairman, Aamir Khan said that while such listing mechanisms are already popular in the developed markets, in Pakistan it is just something “on our internal board right now”. He proposed the idea of direct listings earlier this month.
He said in an interview that, “If the proposal is approved, it will help companies, especially state-owned enterprises, looking to sell existing shares, as they will not even need approvals from the regulator for the transaction in most instances.”
A direct listing is easier than the currently prevalent method of initial public offerings (IPOs) with numerous terms and conditions that need to be fulfilled.
Following the sentiments of the global markets and riding on strong investor sentiment in Pakistan’s market as well, the companies here are also turning to capital markets for raising funds. Pakistan’s benchmark KSE-100 Index gained 45 percent in the past year, which led to more companies opting to get listed on the bourse.
In the past few years, SECP has allowed a range of new products to encourage companies to get listed. A regulatory sandbox was also introduced by the SECP, which allows startups to operate in unregulated areas. SECP is also working on making Real Estate Investment Trust launches easier.
Furthermore, SECP Chairman informed that the necessity of mandatory building completion certificate has been removed. It was seen as a hurdle by many investors.
The commission has also introduced several changes such as market halts, exchange-traded funds, and digital on-boarding of stock market investors, to allow for smoother and more efficient transfer of businesses from private limited structures to listed companies.