FRA drafting new regulations for IPO book-building process
The Financial Regulatory Authority (FRA) formed a committee to look at new regulations to govern the book-building process during initial public offerings (IPOs), including the pricing and allocation of shares, unnamed sources told Al Mal. The committee’s recommendation will pass through the FRA’s Board of Directors and head, Mohamed Omran. Under the proposed regulations, IPO managers would be required to record the allocation of shares during the book-building process. The FRA would have exclusive custody to these records, granting it oversight over the process. The regulations would also require investors to pay up front for 10-25% of the shares they request during the book-building process, and brokerages would be held responsible for paying for any allocated shares for which investors back down from paying. Foreign investors and others participating in Egypt’s delivery-versus-payment (DVP) mechanism would be exempted from this requirement. The committee is also looking at how oversubscription rates are calculated and share prices are set.
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