SECP planning to allow direct listing of local firms

ISLAMABAD: Pakistan’s markets regulator is considering a proposal to allow direct listing of local companies on the stock exchange, a route that’s easier than meeting rules required for initial public offerings, Bloomberg reported on Monday.

The Securities and Exchange Commission of Pakistan (SECP) is discussing the plan, the regulator’s Chairman Aamir Khan who proposed the idea said in an interview on April 13 at his office in Islamabad.

If the proposal is approved it will help companies, especially state-owned ones, looking to sell existing shares as they will not even need approvals from the regulator for the transaction in most instances.

“Direct listing is a concept which is there in developed markets already,” said Khan. “It’s something on our internal drawing board right now.”

Just like in most other global markets, companies in the South Asian nation are rushing to tap capital markets for funds, riding on strong investor sentiment. Pakistan’s benchmark KSE-100 Index’s 45 percent gain in the past year has encouraged new listings on the bourse.

The regulator has allowed a slew of new products and changes in the past few years including market halts, exchange-traded funds, and digital on boarding of stock market investors.

It has also introduced a regulatory sandbox that allows startups to operate in areas that are not regulated.

SECP is now working on making Real Estate Investment Trust launches easier. The need for a mandatory building completion certificate, seen by many investors as a hurdle, has been removed, Khan said. Pakistan has not seen any REITs after its debut in 2015. An increase in taxes stymied plans of about eight REITs.