THE practice of offering perpetual securities (perps) and preference shares via automated teller machines (ATMs) to the public has come under scrutiny recently.

Critics argue that these highly risky instruments may not be suitable for everyone and to expect ATM applicants to have read a voluminous offer document before applying is unreasonable; regulators on the other hand maintain that as long as risks are fully laid out in offer documents, such instruments can be offered to retail investors.

To further justify the practice, it is also pointed out that perps and preference shares rank ahead of ordinary shareholders in a liquidation and since subscription to ordinary share offerings have been available via ATMs for years, there is no reason to deny the retail public access to such potentially high yielding investments.