PSX proposes amendments in GEM board regulations

December 30, 2021 (MLN): Pakistan Stock Exchange has proposed amendments to regulations pertaining to the definition of accredited individual investor and its eligibility to trade in Growth Enterprise Market (GEM) companies, a notice issued by Exchange showed.

For the unversed, recently, stockbrokers had asked the regulator to revoke the investors’ eligibility criteria for trading on the newly launched GEM board in order to achieve hassle-free trading.

PSX, after considering the concerns raised by some of the security brokers and Pakistan Stock Brokers Association and subsequent deliberation held with them, is proposing to make following amendments to its regulations:

1. Definition of Accredited Investor is proposed to be amended as below:

[a] An additional definition of Accredited Individual Investors is proposed to be specified, whereby an individual who holds securities in CDC worth PKR 5 million or more at the time of self-declaration should also be considered eligible to trade in GEM companies.

[b] The existing definition of Accredited Individual Investors to have net assets of at least PKR 5 million is proposed to be replaced with total assets of same value.

2. PSX Regulation 4.29 is proposed to be amended to empower PSX to notify the manner of determining eligibility of an Accredited Individual Investor. In this regard, self-declaration of eligibility by individual investors would be considered sufficient as a verifiable mean to trade in securities listed in GEM.

Additionally, following operational arrangements are being considered to be adopted by PSX:

3. Any ineligible investor who has subscribed shares of company listed in GEM would be allowed one-time exit at his/her own risk, without any responsibility at Securities Broker end.

4. Auto-marking of all those Accredited Investors would be done in National Clearing and Settlement System of NCCPL who participated in the IPO following due process of submitting self-declaration.

So far, two listings have taken place on the counter, Pak Agro Packaging (GEMPAPL) and Universal Network Systems Limited (GEMUNSL). GEMPAPL raised Rs198mn by offering 8mn shares at a strike price of Rs.24.75 per share. While, GEMUNSL raised Rs446mn by offering 6.9mn shares at a price of Rs65.

Recently, Adamjee Life Assurance Company has also applied for listing.

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