Fractionalization – SECP makes high value illiquid assets accessible to smaller investors

ISLAMABAD, May 11 (APP): In line with SECP’s continuous efforts for modernizing of 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 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, said a Press release issued here.

“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. As a result, it allows smaller investors to reap benefits of such 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 USA, Malaysia, Singapore and UAE have embedded fractionalization to improve financial inclusion and to cater to the needs of 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 context of Pakistan. SECP is also testing this business model in sandbox testing environment. The concept note is open for public comments that can be shared at [email protected] .