A new simpler and faster IPO subscription method will start under a pilot project next month.
The new system will cut down the processing time of an initial public offering (IPO) to three weeks from the current requirement of more than five weeks.
It will also eliminate hassles that investors face in submitting IPO applications and depositing cash with the banks and getting refunds for unsuccessful applications.
As many as 118 stockbrokers and merchant banks will participate in the pilot project, which was approved in a meeting of Bangladesh Securities and Exchange Commission last week.
Of the institutions, 66 stockbrokers are from Dhaka Stock Exchange, 36 stockbrokers from Chittagong Stock Exchange and 16 are merchant banks.
The stockmarket regulator also asked the institutions to inform their clients about the pilot project for IPO subscription.
The stockbroker or the merchant bank will provide the issue manager with IPO subscribers' data, which will be checked by the Central Depository Bangladesh Ltd before the IPO lottery.
The stockbrokers and the merchant banks will transfer the money of successful IPO applicants to the issuer company's escrow account.
Investors that are not successful in the lottery will be allowed to withdraw or use their proceedings immediately after the lottery. In addition to the pilot project, investors can also make IPO subscription through the existing system.
Presently, retail investors need to attach cheque or cash to the completed IPO application form and hand it in to the issuer's designated banks. After the lottery, successful applicants get allotment certificates; while unsuccessful applicants have to collect refund warrant to encash the subscription fees.