Fractionalization: SECP ensures assets accessible to smaller investors
SECP has made high-value illiquid assets accessible to smaller investors under a concept note on “Asset Fractionalization”.
In line with SECP’s continuous efforts for modernizing the corporate sector and making it more inclusive, SECP has published a concept note on “Asset Fractionalization”, which is now open for public comments.
The aim of exploring the potential of asset fractionalization in Pakistan is to create new investment vehicles, ensure the availability of a broader range of investment options, create liquidate illiquid asset pools, and work towards higher compliance with international best practices leading to an equitable and accessible capital market.
“Asset Fractionalization”, is the bifurcation of a high-value asset into smaller denominations. This process turns the high-value asset into affordable investment opportunities for smaller investors.
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As a result, it allows smaller investors to reap the benefits of such a high-value illiquid asset class. For making the democratized benefits of this process more transparent, this process is proposed to be based on distributed ledger technology.
Asset fractionalization of real assets is gaining global momentum and the concept is being introduced to assess the sustainability of a new investment avenue for small investors. Many countries like the USA, Malaysia, Singapore, and UAE have embedded fractionalization to improve financial inclusion and cater to small investors’ needs.
Market experts have appreciated this move of SECP to facilitate small investors.
SECP, with its resolve to provide momentum to its regulated sectors to opt for tech-enabled solutions, has published the concept note to explore the potential of asset fractionalization in the context of Pakistan. SECP is also testing this business model in a sandbox testing environment. The concept note is open for public comments that can be shared at feedback@secp.gov.pk .
The concept note is accessible at https://www.secp.gov.pk/docume
