Small investors: the SECP will make high-value illiquid assets accessible – Business & Finance

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has taken steps to make high-value illiquid assets accessible to small investors through asset splitting in Pakistan.

In line with SECP’s ongoing efforts to modernize the corporate sector and make it more inclusive, SECP has released a concept note on “Asset Splitting”, which is now open for public comment.

The aim of exploring the potential of asset splitting in Pakistan is to create new investment vehicles, ensure the availability of a wider range of investment options, create illiquid asset pools and work towards greater compliance with international best practices leading to fair and accessible capital. market.

“Asset fractionalization” is the bifurcation of a high-value asset into smaller denominations. This process transforms the high-value asset into affordable investment opportunities for small investors. As a result, this allows small investors to reap the benefits of such a high-value illiquid asset class. To make the democratized benefits of this process more transparent, it is proposed to base this process on distributed ledger technology.

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Asset splitting of real assets is gaining momentum globally and the concept is being introduced to assess the sustainability of a new investment avenue for retail investors. Many countries like the United States, Malaysia, Singapore, and the United Arab Emirates have incorporated fractionation to improve financial inclusion and meet the needs of small investors.

The SECP, determined to give impetus to its regulated sectors to opt for technological solutions, has published the concept note to explore the potential of asset splitting in the context of Pakistan. SECP is also testing this business model in a sandbox test environment. The concept note is open to public comments which can be shared on [email protected]

The concept note is accessible at pk/document/concept-note-asset-fractionalization-for-public-comments/?wpdmdl=44489.

Copyright Business Recorder, 2022