Message from Chairman, Securities and Exchange Commission of Pakistan

I wholeheartedly congratulate the Pakistani capital market on successful divestment of shares of the country's stock exchange! All stakeholders, especially the Pakistan Stock Exchange's Divestment Committee, the PSX management and the SECP team involved in the divestment process deserve praise and recognition for ensuring completion of this milestone in a timely, efficient and transparent manner.
On behalf of the SECP, I also thank the Government of Pakistan for extending its full support towards implementation of this key initiative. In particular, the capital market is indebted to the Honourable Finance Minister for his valuable guidance and support for successful completion of the reform agenda.
The SECP ensured timely completion of the divestment of PSX shareholding as a statutory obligation under the Demutualization law and considering the significance of the same for the capital market, the SECP took all necessary measures to ensure absolute transparency, impartiality and efficiency that had been the key to ensuring investor confidence and securing reliable partnerships for PSX. Divestment of the stock exchange's strategic stake is setting foundation for a bright future for the Pakistani capital and financial markets in particular, and the economy in general. It is expected that divestment will lead to improved governance, technological partnerships, new product development, market outreach, and opportunities for PSX to establish linkages with regional and international markets, thereby increasing its visibility and improving marketability. While the foreign investors will bring investment, vast managerial experience and technological assistance, the local financial institutions will have the required knowledge of the local market and may contribute significantly to enhancing market outreach for the Exchange. Also, amidst the commencement of Pakistan's biggest infrastructure development project CPEC, divestment will provide an opportunity for companies to utilise PSX to raise capital.
The initiative of divestment has been preceded by various market reforms which increased the chances of the sale of strategic stake of PSX to global investors and paved the way for successful completion of the initiative. These include Demutualization and integration of the three national bourses under the Demutualization law, promulgation of major securities and futures market laws, key structural reforms at market infrastructure institutions, implementation of new risk-based regulatory regimes for market intermediaries, attainment of status of central counterparty by the clearing company and assignment of risk management regime to it. All these reforms had a tremendous positive impact both home and abroad, and are evidence of the Government's and regulators' resolve to create a fair, efficient and competitive capital market in the country. Resultantly, about mid last year, we also witnessed reclassification of Pakistan's index as an emerging market index by the MSCI, owing to the improving macroeconomic indicators, stable political environment and positive outlook of our financial markets due to the Government's investment friendly policies. This reclassification is expected to significantly increase Pakistan's chances of securing domestic and foreign retail and institutional investment.
Post divestment, the SECP as the apex regulator will continue with the reform agenda for the capital market - with support from the government and other stakeholders, we are implementing a number of requisite reforms for addressing key issues and for catering to investment needs of the investors, while fostering transparency and investor protection. An effective and vigilant enforcement mechanism will be put in place with zero tolerance for market abuse. We will also be working with PSX closely to develop the SME, debt and derivatives segments to ensure that the investors are provided with diverse investment alternatives. Meanwhile, we are introducing key reforms for promoting ease of doing business and facilitating corporatization in the country which will complement the Government's vision of higher foreign investment inflow and result in greater activity and revenue generation for the economy.
Pakistan, as a developing economy, needs a stock exchange that enjoys the confidence of domestic and foreign investors and is able to mobilize capital for economic growth. Post divestment, PSX must focus on improving transparency, liquidity, outreach and investor protection. The SECP is willing to extend all possible support to the market participants in these endeavours!