KARACHI: With the maiden listing of Pak Agro Packaging Ltd, trading on the Growth Enterprise Market (GEM) board of the Pakistan Stock Exchange (PSX) will start tomorrow (Friday).

GE M a newly launched counter on the PSX is reserved for `growth companies` carrying higher investment and liquidity risks than mature companies listed on the main board ofthe exchange.

The opening price of the company will be Rs24.75 per share as per the bookbuilding process early this month in which the firm raised Rs198 million. With the trading symbol of GEMPAPL, the scrip will be quoted in the paper andboard sector of the PSX.

In addition, logistics firm Universal Network Systems Ltd that operates under the brand name of BlueEX also raised about Rs446m recently. Trading in BlueEx shares will start within two weeks on the GEM board.

Only for accredited investors In a separate notice on Tuesday, the PSX told individual investors that they must `self-declare` themselves as accredited investors if they want to trade in GEM-listed securities.

According to the PSX rules, only institutions or accredited individual investors registered with the National Clearing Company of Pakistan Limited (NCCPL) having net assets of at least Rs5m can buy and sell stocks in the riskier companies listed on the GEM counter.

If an investor places a bid for a GEM-listed company without being already marked as an accredited individual, the PSX will askthe relevant broker to obtain a self-declaration.

`If the investor is nonaccredited, the [broker] will honour the transaction from its own account by rectif ying the underlying trade as per the current rectification mechanism or via the NDM mechanism,` it said while referring to the offmarket or negotiated-deal market trades. In simple words, shares won`t be credited to the unaccredited investor`s account even if they place the trade unwittingly.

However, not all market analysts are happy with the preconditions notified for accredited individual investors.

`I have serious doubts about the screening process for accredited investors. Is self-declaration enough? Did the PSX explain to brokers beforehand what to do if non-accredited investors managed to buy GEM-listed securities?` said Sani-eMehmood Khan, an independent capital market expert who served as general manager of the PSX inthe past.

`Having net assets of Rs5m doesn`t automatically make an investor sophisticated. Everyone knows how brokers convince people to invest. The regulator should`ve used a better methodology to ascertain the level of sophistication amonginvestors,`headded.

Topline Securities CEO Mohammed Sohail disagreed with the view that brokers lack the capacity to handle trading on the GEM board. `Brokers are already doing KYC [know-your-customer] and setting trading limits of clients based on their income and assets,` he told Dawn.

Another broker said net assets in the NCCPL system constitute the most feasible proxy for an investor`s financial muscle. `Trading on GEM is restricted for the general public. The premise is that the accredited investor is already a UIN [unique identification number] holder and has a fair idea what the stock marl(et is all about,` said a broker requesting anonymity.