SECP needs to be made more responsive: chairman

The Chairman Securities and Exchange Commission of Pakistan (SECP) Muhammad Ali Ghulam Muhammad has said that the response time at SECP needs to be reduced substantially. Speaking at his first meeting with the senior management of SECP, shortly after joining the Commission, the SECP chairman directed that any letter, proposal, complaint or any kind of communication received at the Commission has to be responded back by the concerned department as soon as possible.
Going forward, he said, a system will be implemented whereby response time of different items will be defined based on the nature of work involved. The current backlog of appeals and investor complaints has to be efficiently dealt with and should be cleared in the next months.
Muhammad Ali praised his predecessors for engaging and retaining good quality human resource but indicated his concern for lack of co-ordination and teamwork. He stressed the need for joint effort at all levels of the Commission in order to achieve the desired goals and to grow as an institution. It is the collective effort of all employees of the Commission that will lead to the success of the organisation and this is possible through better co-ordination both within as well as amongst different divisions and departments of the Commission. At the same time, he also emphasised on the need for inculcating a positive attitude and an open two-way communication culture.
As a first step towards achieving the objective of teamwork, Muhammad Ali informed the senior management that Management Committee (M.Com.), comprising of departmental heads, is being formed, which will meet on a regular basis. This will improve inter-departmental co-ordination. The purpose is twofold: first to share information with senior management and second to brainstorm on issues that are of critical nature. Further, an annual offsite meeting of SECP will be held where all departmental heads will give presentations covering the achievements or work done during the last one-year and the targets for the next three years. The three-year strategic plan will be broken down into realistic yearly targets. The plans will be finalised individually by each departmental head in consultation with the Chairman, prior to the holding of the annual meeting. The targets set for each department will be objective and quantifiable to the extent possible. The first annual meeting will be held during the month of March.
He said that the HR department will revamp the HR policies and this will be done after taking into account the views and suggestions of the employees of SECP. The objective will be to set down procedures and policies that can consistently be applied on all officers of the Commission.
The Chairman SECP assured that the existing complaints of SECP employees will be scrutinised and efforts will be made by the Commission to resolve the same amicably. Cases that end up in the court are neither favourable for the employee nor for the Commission, since it is a complete waste of time, energy and resources at both ends.
There have been very few training opportunities for SECP employees during the last few years. He stressed the need for capacity building at SECP, as that is the only way to keep pace with the developments taking place in the world. Trainings, he said, will resume this year.
The HR Department will prepare an annual training plan, taking into account the areas where training is required as well as the cost associated with it and once finalised, the same will be fairly implemented across various employees. The Commission will try to get the requisite funding from the multilateral donor agencies for capacity building of SECP officers and, where required, will also use its own resources.
He said that communication, feedback and involvement of employees at all levels is needed to ensure that the best ideas prevail. HR Department will set up systems whereby employees can give suggestions as well as lodge complaints and give ideas towards better functioning of the Commission. To effectively deal with the employee grievances, Ali informed that a mechanism will soon be put in place by HR department.
The SECP e-newsletter is being restarted. An editorial team will be formed and the scope of the newsletter will be clearly laid out. This will help us share information about various activities taking place at SECP both with internal as well as external stakeholders.
It is important that the employees of the Commission understand the critical nature of the work performed by them and the impact that any leakage of information can have on the market. More specifically the work at SECP is crucial and untimely disclosure or sharing of information within Commission or with anyone outside can result in serious repercussions like price manipulation, insider trading, etc. It is, therefore, important that utmost confidentiality is maintained by all at all times.
Regarding enforcement of regulations, the SECP chairman said "We have sound regulatory framework but need to strengthen the implementation and enforcement of laws. Our approach is more reactive in nature rather than being proactive. We have to foresee issues and problems and take corrective measures well in advance". Efficient regulation of capital markets requires advance remedial measures to detect front running, insider trading, market manipulation, etc. A concerted effort is required both by SECP as well as the SROs to discipline the markets. A proactive stance by SECP will also help in changing the negative perception of investors about the capital market. This perception can only change if the rights of the investors are well protected and stern action is taken against those who are found guilty of abuse.
About the growth and development of capital markets, he said there is a need to introduce new products in the market. Presently we only have equities market and that too is active in only a few scrips. In order to add depth to the capital markets we need new products. There are a number of areas, which need our immediate attention. To quote just a few: development of debt market is an immediate need; insurance penetration in Pakistan is one of the lowest in the world - we have to look at ways and means to improve the same; mutual fund industry needs to reach the masses to attract their savings- what measures should be taken to revive this industry; REITs have not taken off since inception - what went wrong and where and how can we rectify; more companies need to be attracted to the exchanges to increase market depth and provide investors with more options; derivative instruments are needed to allow investors to better manage their risk and liquidity; commodities trading has not taken off and we need to work with the Commodity Exchange to create awareness as well as remove bottlenecks.
Regarding transparency in corporate sector he said "We have to look at the reasons why companies are not going for listing and how can our regulatory and legal system incentives more companies to list. We need to ensure good corporate governance and transparency in operations and reporting. This is imperative not only for the listed companies but also for the unlisted companies. We need to ensure that the corporate sector shares its real profits with the minority shareholders".
"The level of automation within SECP is satisfactory but to excel and compete with our counterparts in other jurisdictions, we have to move towards further advancement in technology. IT and automation will be the prime areas of focus at SECP in the years to come. We will engage with the multilateral donor agencies to assist us in implementing state of the art facilities and monitoring and surveillance systems at SECP for better and improved enforcement", he said.
He said that the Commission couldn't work in isolation. "We have to work closely with the market participants to understand the market dynamics. Regulatory frameworks will be of little use if there is no appetite for the same in the market or if there is lack of acceptance. We will formulate small task forces comprising of SECP officers and market participants to deliberate and make recommendations to the Commission on specific issues", he added.