The Securities and Exchange Commission of Pakistan (SECP) has initiated a new mechanism for the general public to subscribe for securities of companies selling their shares through an Initial Public Offering (IPO). The new mechanism is termed as the centralized Electronic IPO (E-IPO) (CES) system which is supposed to expedite the processes, making it a hassle-free system for the investors.
Central Depository Company (CDC) has recently launched this concept and implemented it with strong support from 1Link (Guarantee) Limited along with guidance from SECP and State Bank of Pakistan.
SECP stated that the Centralized Electronic IPO system will enable investors to apply for subscription of securities electronically. This system will save the investors’ time and effort as they will not have to manually fill and submit the forms. Moreover, they won’t be required to wait in long ques to submit their IPO application while visiting a bank branch.
From the issuer’s point of view, the E-IPO will be very cost effective as they will efficiently raise funds from the market while reducing the issuing cost and increasing the turnover.
How can an individual register himself under the new system?
Under the new system, investors with a valid CNIC, account in any registered bank and CDC account can register themselves anytime during the day, 365 days a year, by using the website www.cdceipo.com
The registered investors can subscribe for securities by using any banking medium such as ATM, online banking, mobile app or over the counter. With persistent support from SBP, CDC is also considering to introduce e-dividend soon. According to e-dividend concept, the dividend amount will be credited to the investor’s bank account electronically.
These two efficient systems will bring vast improvements in the entire process of investing in the capital markets of Pakistan. As a result, it will bring more transparency and efficiency in the system.
Benefits of Electronic IPO and E-dividend System
Electronic IPO will:
- Expand the outreach of IPOs
- Promote the culture of keeping stocks in a book-entry form
- Expedite the IPO process, making it easy to use
On the other hand, e-dividend, will make dividend distribution very efficient and transparent and remove discrepancies of the previous system.
Therefore, these measures by SECP are indeed welcoming to make capital markets more accessible for the general public while effectively utilizing the growing concept of online banking.