Regulator to launch ASBA interface todayInvestors will not have to stand in long serpentine queues to subscribe to Initial Public Offerings (IPO) and Further Public Offerings (FPO) henceforth, with Securities Board of Nepal (Sebon) launching a new interface that allows investors to apply for primary shares through banks in which they have accounts.
Investors will not have to stand in long serpentine queues to subscribe to Initial Public Offerings (IPO) and Further Public Offerings (FPO) henceforth, with Securities Board of Nepal (Sebon) launching a new interface that allows investors to apply for primary shares through banks in which they have accounts.
Currently, investors have to deposit cash in banks assigned by the issue manager.
Sebon Spokesperson Niraj Giri said the move was aimed at offering relief to investors who were compelled to stand in long queues. “The simplified system is also expected to attract new investors in the capital market,” he said.
The new platform—Application Supported by Blocked Amount (ASBA)—basically blocks the money deposited in bank accounts of investors who wish to purchase shares issued through IPO and FPO. The fund is blocked until the stocks are allotted.
Giri said the investors need to apply through their accounts maintained in banks permitted for ASBA. The bank then forwards the documents to the issue manager on behalf of the investors. “The issue manager then withdraws the investor’s money from the blocked account if the individual is allotted shares.”
According to Sebon, all commercial and development banks are allowed to adopt the system. “Based on the effectiveness of the mechanism, we plan to make it mandatory soon,” Giri said, adding Sebon plans to allow finance companies also to use the interface from mid February.
Sebon said Forward Microfinance will be the first to implement the system. The microfinance will do its IPO on January 22.
As of now, 28 financial institutions have received Sebon’s approval to adopt the ASBA system. Investors can use 1,300 branches of these financial institutions across the country to purchase primary shares, said Sebon.
Stockbrokers were positive about the ASBA system. Parmeshwor Bhakta Malla, managing director of Malla & Malla Stock Broking Company, said the system would help save time of investors. “Besides, the system will also reduce the issuance cost of merchant bankers,” Malla said.