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Book Building System’s Registration Forms Download

July 11, 2010 1 comment

Book Building System for Stock Exchanges in Bangladesh

Securities and Exchange Commission(SEC) of Bangladesh has initiated to develop Book Building System in collaboration with Dhaka Stock Exchange(DSE), Chittagong Stock Exchange(CSE) and Centarl Depository of Bangladesh Limited(CDBL) for the efficient, fair and transparent price discovery and allocation of securities using Book Building System at the time of initial public offerings. In this context, SEC has already made required modifications in the rules and regulations and notified the stake holders through its circuler.

Download The Registration Forms by Clicking the following link

Registration Forms for Book Building System

More About Book Building

Book Building is essentially a process used by companies raising capital through Public Offerings-both Initial Public Offers (IPOs) or Follow-on Public Offers ( FPOs) to aid price and demand discovery. It is a mechanism where, during the period for which the book for the offer is open, the bids are collected from investors at various prices, which are within the price band specified by the issuer. The process is directed towards both the institutional as well as the retail investors. The issue price is determined after the bid closure based on the demand generated in the process.

The Process:

  • The Issuer who is planning an offer nominates lead merchant banker(s) as ‘book runners’.
  • The Issuer specifies the number of securities to be issued and the price band for the bids.
  • The Issuer also appoints syndicate members with whom orders are to be placed by the investors.
  • The syndicate members input the orders into an ‘electronic book’. This process is called ‘bidding’ and is similar to open auction.
  • The book normally remains open for a period of 5 days.
  • Bids have to be entered within the specified price band.
  • Bids can be revised by the bidders before the book closes.
  • On the close of the book building period, the book runners evaluate the bids on the basis of the demand at various price levels.
  • The book runners and the Issuer decide the final price at which the securities shall be issued.
  • Generally, the number of shares are fixed, the issue size gets frozen based on the final price per share.
  • Allocation of securities is made to the successful bidders. The rest get refund orders.

Guidelines for Book Building

Rules governing Book building are covered in Chapter XI of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000.

BSE’s Book Building System

  • BSE offers a book building platform through the Book Building software that runs on the BSE Private network.
  • This system is one of the largest electronic book building networks in the world, spanning over 350 Indian cities through over 7000 Trader Work Stations via leased lines, VSATs and Campus LANS.
  • The software is operated by book-runners of the issue and by the syndicate members , for electronically placing the bids on line real-time for the entire bidding period.
  • In order to provide transparency, the system provides visual graphs displaying price v/s quantity on the BSE website as well as all BSE terminals.

CSE launches book building system

Chittagong Stock Exchange Ltd. has become the first bourse of the country to launch the Book Building System, the mechanism of fair price discovery of shares.
With the bidding for shares of Ocean Containers Ltd. (OCL), a local enterprise engaged in container business, CSE has pioneered the long waited Book Building System, a widely practiced method of price discovery of shares. Earlier OCL was listed on November 03 2009 for the first time under the Direct Listing Regulation as well as Book Building method and received permission of CSE to offload shares on the bourse. The book-building software hosted at CSE has been used to start the trading. In the initial stage of the bidding only institutional investors such as banks, financial institutions, insurance companies, stock dealers and merchant banks will participate for the bidding. Normal trade for the General investors will start two days after the transfer of the share of OCL allotted to the eligible institutional bidders is completed.
The eligible institutional investors participate in a three day bidding starting from February 22 at 6.00 pm to 9.00 pm to set the final price. The bidding will continue up to today. The institutional investors are to fix the final price and this will be a reference price for the general investors.
OCL has been allowed to sell 10.71 million shares to general investors and 1.19 million shares to institutional investors and the indicative price of each share is Tk 121.40. To fix the indicative price of the OCL share, Platinum Securities, Eastland Insurance, National Housing, Continental Insurance and National Securities and Consultants submitted their bids and the average of their bids is the indicative price.
In the price discovery phase through book building, bidders cannot quote 20 per cent more or less than the indicative price, meaning they will have to offer between Tk 98 and Tk 145 for each share.
The book building method was introduced in March last year, aiming to encourage private-sector entrepreneurs to list their companies on bourses at fair prices.
Using this book building method, institutions bid for shares through which the price is discovered.
The institutional bidders will be allotted security on pro-rata basis at the weighted average price of the bids that would clear the total number of securities being offered for the institutional bidders.
The institutions will not be allowed to sell shares in the first 15 trading days under the lock-in system.
The OCL is a pioneer for inland container depot and container freight stations in Bangladesh. Its activities, though initially were Ltd. to storage of empty containers, now comprises of stuffing and un-stuffing of more than 7,000 containers a month and a daily empty storage of 1,800 containers.

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InspireABook! The simplest book building system in the world!

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