The Securities and Exchange Commission of Pakistan (SECP) has approved the joint procedure for the new Book Building Mechanism.
With this approval, recent significant amendments to the Public Offering Regulations, 2017, have been finalized, establishing the operational structure and procedure for book building in Initial Public Offerings (IPOs).
The implementation of this new system is being hailed as a major milestone in modernizing Pakistan’s capital market. This system is part of SECP’s broader agenda to promote fair price determination, improve transparency, increase investor confidence, and foster greater inclusion and efficiency in the market.
Under the new mechanism, the Pakistan Stock Exchange (PSX) and the National Clearing Company of Pakistan Limited (NCCPL) have jointly developed an updated book-building system aligned with the amended regulations. A major structural reform of this upgraded system is the introduction of the concept of Eligible Participants in place of the conventional book-runner model.
Under this new framework, all Securities Brokers, Scheduled Banks, Development Finance Institutions (DFIs), and Mutual Funds are allowed to participate directly in the book-building process. The system provides a simplified interface for Securities Brokers to onboard clients efficiently, while Banks and DFIs acting as ‘Consultants to the Issue’ in an IPO can also register their clients to participate.
Eligible Participants can directly submit bids in the book-building system on their own behalf or on behalf of their clients. Investors will also have the facility to choose whether to keep their bid disclosed or undisclosed, ensuring confidentiality of the bid where required.
By enabling wider participation, this new mechanism is expected to improve market access, efficiency, and competitiveness. The system leverages the existing technical infrastructure of the capital market, integrating the PSX’s book-building system with the functions of the NCCPL to streamline the process of margin money deposit, settlement, and refund.
