KARACHI: President Asif Ali Zardari on Wednesday said that completion of the process of demutualization of stock exchanges in the country was a landmark achievement and a historic reformation of the country's capital market.
He said that the initiative will help promote sustainable growth of the market and in spurring the economic activity in the country.
This he said during his meeting with a delegation comprising of representatives of Securities & Exchange Commission of Pakistan, Stock Exchanges of the country and leading Securities companies of the country here at Chief Minister House.
The delegation included among others Muhammad Ali, Chairman SECP, Muneer Kamal, Chairman-Karachi Stock Exchange, Dr. Salman Shah, Chairman Lahore Stock Exchange, Muhammad Rashid Zahir, Chairman Islamabad Stock Exchange, Managing Directors of the Stock Exchanges, Haji Abdul Ghani, Dr. Yasir Mehmood, Syed Mukhtar Hussain Jafery, Akeel Karim Dhaidi, Arif Habib, Zafar Moti, Ameen Esa Tai, Yaseen Lakhani and others.
Governor Sindh Dr. Ishrat-ul-Ibad Khan, Chief Minister Sindh Syed Qaim Ali Shah, Finance Minister Dr Abdul Hafeez Sheikh, Provincial Ministers Pir Mazhar-ul-Haq, Murad Ali Shah, Agha Siraj Durrani, Ayaz Soomro, Sharjeel Memon, and Speaker Provincial Assembly Nisar Ahmed Khuhro and Sharmila Farooqi were also present during the meeting.
Spokesperson to the President Senator Farhatullah Babar while giving details of the meeting said that the Demutualization Bill was approved in the joint sitting of the Parliament on March 27, 2012 and was enacted into law by the signatures of the President on May 7, 2012.
Giving background, the Spokesperson said that the Pakistani stock exchanges were operating as non-profit companies with a mutualized structure wherein the members had the ownership as well as trading rights.
This pattern created conflict of interest as members controlled the affairs of the stock exchange that resulted in lack of transparency in the operations and also compromised investors' interest.
He said that the corporatization and demutualization of stock exchanges has converted the stock exchanges' structure from non- profit, mutually owned organization to for-profit entities owned by shareholders.
Spokesperson said that the President during the meeting today complimented the Securities and Exchange Commission of Pakistan and the stock exchanges for their support to such a landmark achievement.
The President said that the Government accords due importance and has always supported the capital market. He said that the passage of the Bill in the joint session of the Parliament clearly reflected the importance given to the stock exchanges.
The President said that capital markets channel savings into investments which in turn leads to increased employment and output.
He said that in developing countries like Pakistan, capital markets can play a great role in capital formation.
He said that we need to make our stock exchanges a major source of capital formation. The President noted the steady progress made by capital market and restoration of the investors confidence and emphasized that more needs to be done to make the market more liquid and efficient to attract investors.
The President reiterated that the Government believes in providing a level playing field to the private sector. He said that far-reaching financial and structural reforms have been introduced by the Government and now it was for the private sector to avail the available opportunities.
It should step forward to raise capital through fresh debt and equity listings, he continued. He said that the debt market needs special attention.
Spokesperson said that Chairman SECP during the meeting suggested that capital markets should be utilized for government borrowings.
Agreeing to his suggestion, the President remarked that the listing of government debt on the stock market will help raise additional funds in a timely and documented manner. He urged the Ministry of Finance to consider the suggestion and take necessary measures for implementing this initiative.
The President also expressed his support to promulgation of other laws mentioned by the Chairman SECP which included The Securities Bill, the SECP Bill, Futures Trading Act and Corporate Rehabilitation Act.
The President urged the concerned standing committees of both the Houses to expedite finalization of these laws.
While reiterating Government's commitment to encourage a culture of corporatization, the President also emphasized that upon the need for further reforms and to support enhanced entrepreneurship and corporatization. The President, on this occasion also called upon Federal Board of Revenue to encourage corporatization through tax incentives.
The President said that Pakistan was an emerging market with great potential for growth.
He said that the country was offering attractive incentives to the investors by putting in place investment friendly regime. He emphasized upon the need to attract foreign investment both channelized through the capital market as well as direct.
The President said, "we have come a long way from the market situation of 2008 after braving many challenges."
Expressing the hope that Demutualization would take our markets to new heights, the President also called upon the stock exchanges to introduce new products.
These products, the President said, should be designed not only to cater to the needs of the local investors but also to attract foreign investors.
The participants thanked the President for meeting and for his personal interest in further strengthening of the capital market and stock exchanges of the country.
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