A pilot project for the initial public offering subscription fee collection through brokerage houses and merchant banks instead of banks will now start in September.
July 15 this year was the earlier timeline for the project set by the stock market regulator commission. The Bangladesh Securities and Exchange Commission set the fresh time to introduce the new system in a commission meeting held in the capital on Tuesday, a BSEC release said.
As many as 118 institutions, including 66 brokerage houses of the Dhaka Stock Exchange, 36 of the Chittagong Stock Exchange and 16 merchant banks, will participate in the pilot project, it said.
The overseas investors, however, will continue to subscribe IPO through banks.
The commission had earlier approved the proposed public issue process in this regard and asked all the institutions concerned — stock exchanges and the Bangladesh Merchant Banks Association and Association of Bankers Bangladesh — to inform the regulator after completing all the upgradation required in this connection.
A BSEC official had earlier said, ‘In the case of collecting IPO subscription fees through brokerage houses, investors will pay the IPO subscription fees to the stockbrokers and merchant banks. A brokerage will open a separate bank account for all of its clients in this regard.’
After the collection of the fund the broker will provide the issue manager with IPO subscribers’ data and the data will be checked by the Central Depository Bangladesh Limited before the IPO lottery.
Investors, who will not get the IPO shares, will be allowed to withdraw their subscription fees after the lottery.
The brokers will require to develop a system to collect the fees from the investors and they will get a certain amount of commission for the job, the official said.
In the existing system of subscription through banks, it takes more than one and a half months to get refund if an investor fails to get shares through the lottery, he said.
Once the IPO subscription process through the brokerage houses starts, it will take around 25 days to get the refund, the official said.
-With New Age input
