A novel book-building tool to increase capital market transparency has been approved by SECP.

In an effort to modernize capital markets, encourage fair pricing, and enhance transparency, the Securities and Exchange Commission (SECP) announced on Tuesday that it had approved a new book-building mechanism.

All banks, mutual funds, development finance organizations, and securities brokers will be able to take part directly in the book-building process under the new framework. It supports the SECP’s overarching objective of increasing market participation and enhancing efficiency while working to boost investor trust.

The action is a part of the regulator’s continuous efforts to improve the South Asian nation’s capital markets, which have long struggled with low investor engagement and opaque public offerings.

“On their own behalf or on behalf of their clients, eligible participants can place bids directly into the book building system,” the SECP stated in a statement.

“Where desired, investors can choose between disclosed and undisclosed bids, guaranteeing bid visibility confidentiality.”

In accordance with the updated rules, the National Clearing Company of Pakistan Limited (NCCPL) and the Pakistan Stock Exchange (PSX) collaborated to create this book building method.

The SECP stated, “The new mechanism is anticipated to increase outreach, improve efficiency, and improve overall market competitiveness by enabling wider participation.”

The regulator claims that the new system creates an operational structure and protocols for book-building in initial public offerings (IPOs). By combining the PSX book-building platform with NCCPL’s collection, settlement, and margin refunding capabilities, it makes use of the capital market’s current technology infrastructure.

According to the SECP, “the system gives securities brokers an easy-to-use interface to onboard clients efficiently.” “In a similar vein, banks and DFIs serving as consultants to the issue and participating in an IPO may also register their clients.”