ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has taken a decisive step towards streamlining the Initial Public Offering (IPO) market by implementing a standardized approval process. A recent circular under section 172 of the Securities Act, 2015, has set a maximum period of 14 working days for the regulatory approval of listing applications and prospectuses.
Moreover, the circular has introduced a 15-day window for the Pakistan Stock Exchange Limited (PSX) to complete the post-approval procedures for listing, marking a significant overhaul in the IPO application process. These timelines were established after extensive consultations with stakeholders, reflecting the commitment to enhancing efficiency and transparency in the IPO market.
One of the key aspects of the revamped process is the automation of procedures, bringing in technological advancements to expedite the approval process. To ensure a swift and thorough evaluation, the Consultant to the Issue (CTI) has been assigned a pivotal role. The CTI is now tasked with conducting a detailed assessment of both the issue and the issuer, providing a due-diligence certificate that confirms the comprehensive disclosure of all material information required by law or suggested by the PSX and SECP in the prospectus.
This strategic move by SECP is expected to make the IPO market more appealing to potential issuers and investors alike. The move to remove unnecessary red tape comes on the back of an increase in market activity in the PSX, as the benchmark KSE-100 index crosses the 55,000 milestone for the first time. It is important to note that throughout 2022, Pakistan Stock Exchange only saw 3 successful IPOs.
The new step represents the initial phase of SECP’s broader efforts to revamp the IPO regime, with a vision to foster growth and development in the financial ecosystem. The efficient allocation of funds and the subsequent boost in local economic growth are anticipated outcomes of a more robust IPO market.
The circular, effective immediately, is meant to serve as a directive to all stakeholders, including PSX, CTIs, book runners, issuers, and other market participants, urging them to adhere to the standardized approval process. This regulatory shift signifies a pivotal moment in the evolution of Pakistan’s financial landscape, emphasizing the commitment to modernization and increased market attractiveness.