KARACHI: The Pakistan Stock Exchange (PSX) has sought feedback from the stakeholders of the equity market on the proposed reforms for the Growth Enterprise Market (GEM).
A separate counter reserved for riskier and smaller entities that raise public funds, the PSX introduced GEM in the second half of 2021. However, its reception has been lukewarm so far in terms of the number of listings as well as the volume of shares traded on the counter on a daily basis.
Under the proposed reforms, the threshold of assets held by an individual to qualify as an accredited investor — a precondition for trading shares on the GEM counter — will be reduced from Rs5 million to Rs1m.
The proposed reduction will apply to those who subscribe to shares in the issuance/offering phase as well as the ones who trade the same securities after their listing on the GEM counter.
However, the general public — meaning ordinary investors eligible to trade shares on the main counter of the PSX — will be allowed to buy and sell a GEM-listed security only after six months of the date of its listing on the sideboard.
However, this proposal includes a prerequisite that the GEM-listed company must have disseminated its half-yearly financial statements reviewed by a statutory auditor as well as its half-yearly progress report showing the status of the commit ment mentioned in the Information Memorandum.
The proposed amendment is expected to help attract new investors and promote liquidity on the GEM counter, the PSX says.
The recommended changes follow earlier episodes of regulatory reform meant to popularise the GEM counter among investors. For example, the threshold of assets held by an individual to qualify as an accredited investor was reduced from Rs15m to Rs5m sometime ago.
