The Securities and Exchange Commission of Pakistan (SECP) on Wednesday published a concept note on “Asset Fractionalisation” to improve financial inclusion and make high-value illiquid assets accessible for small investors.

“In line with the SECP’s continuous efforts for modernising the corporate sector and making it more inclusive, the commission has published a concept note on asset fractionalisation, which is now open for public comments,” said a statement issued by the SECP.

The aim of exploring the potential of asset fractionalisation is to create new investment vehicles, ensure availability of a broader range of investment options, liquidate illiquid asset pools and work towards higher compliance with international best practices leading to an equitable and accessible capital market.

Asset fractionalisation is the bifurcation of a high-value asset into smaller denominations. This process turns the asset into affordable investment opportunities for small investors. As a result, it allows such investors to reap benefits of the high-value illiquid asset class.

“For making the benefits of this process more transparent, this process is proposed to be based on distributed ledger technology,” the SECP said.

Fractionalisation 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 US, Malaysia, Singapore and the UAE have adopted fractionalisation process to improve financial inclusion and cater to the needs of small investors.

The 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 fractionalisation in the context of Pakistan, the statement said.

Published in The Express Tribune, April 28th, 2022.

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