Inaugurating a unified or integrated stock exchange of the country - Pakistan Stock Exchange (PSX) - here on Monday, Finance Minister Ishaq Dar said that the PSX would play a major role towards country's economic development and consolidating its gains. He was addressing the launch ceremony of the PSX, which has been formed by merging Karachi Stock Exchange (KSE), Lahore Stock Exchange (LSE) and Islamabad Stock Exchange (ISE) into one national stock exchange.
Earlier, he rang the gong to launch the trading activity on the PSX. On the occasion, the messages of Mattias Martinsson, CIO/Partner, Tundra Fonder AB (representative of Scandinavian commission) and the US Commodity Exchange were read. Tuncay D?NÇ, Chief Executive Officer, Borsa Istanbul A.S., highly appreciated the creation of the PSX.
Ishaq Dar termed the day a historic one saying that it took 15 years to make this dream come true. He said the formation of single national stock exchange would send a positive message abroad and would attract more foreign investors to the country's capital market. He said the government was determined to facilitate the law-making process in the capital market and most of the work has been done successfully while work on Bills including Securities and Exchange Commission of Pakistan (SECP) Bill, 2015, the Competition Restructuring Bill 2015 was in process and they would also be passed soon.
In this regard, parliament is deliberating on the Companies Bill 2015, the Futures Market Bill, 2015 and the Corporate Restructuring Companies Bill 2015 and said that these laws would have a significant impact on the performance of country's financial and capital markets and will be instrumental in improving regulatory enforcement, compliance and facilitation.
The government has extended support to the capital market through enactment of crucial legislation such as the Securities Act, 2015 which has paved the way for effective regulation of the securities market in line with international best practices. He told the audience that the country's foreign reserves have increased from $11.5 billion to $20 billion due to prudent economic policies of the government. Dar said the PML- N government has achieved economic stability of the country and now is focusing on GDP growth and job creation.
He termed the event a milestone in the history of Pakistan's financial and capital markets and said it will go a long way towards country's sustainable development. He congratulated the entire stakeholders of the Pakistani capital market for successful completion of the initiative and specially appreciated the SECP team for its untiring efforts towards making this landmark achievement.
He said the government has a clear vision for future development and the establishment of Pakistan Stock Exchange and the efforts for divestment of its shareholding is a part of the same vision. He wished to see Pakistan Stock Exchange as a completely revamped and progressive exchange, well-positioned to attract global strategic investment and benchmarked internationally.
He also expressed his government's resolve for creation of a strong, vibrant and competitive financial and capital market and said that from the day one this government has placed the issue of financial sector development at the forefront. He hoped that the management of newly formed PSX would focus on good transaction, governance and transparency and it would help further improve the country's capital market performance.
He asked political parties that they must not do their politics over projects of national importance. "All the political parties should get together and work jointly for resolving challenges faced by the country for its betterment," Dar added. He said under the dynamic leadership of Prime Minister Nawaz Sharif, the government managed to take the country's economy out of crisis as was endorsed by 22 international economic institutions who had termed the Pakistan's economy as stable.
He said now due to a rapidly improving economy, foreign investors were taking keen interest to invest in Pakistan. "The $46 billion mega project of the China-Pakistan Economic Corridor is a game changer and it would bring prosperity and stability in the country," the minister added.
He said the government had also introduced measures to enhance revenue collection and the government's Voluntary Tax Compliance Scheme was part of those measures which would help bring hundreds of thousands new taxpayers into the tax net. The scheme was no amnesty scheme; it was in fact a voluntary scheme which was introduced for the facilitation of small traders.
He said the government was endeavouring to resolve energy crisis and to end the load shedding by end 2017 or by the start of 2018 as 10,000 MW more electricity would be added to the national grid by that time. In his speech, Chairman SECP Zafar Hijazi said the SECP has realised that unless the three stock exchanges integrate, no strategic investor would come forward and therefore the SECP remained engaged in dialogue with the stock exchanges for their integration and fully facilitated a consultative process.
He said that Pakistan needs a stock exchange that commands absolute confidence of domestic and foreign investors and is able to mobilise capital for economic growth. To achieve such absolute confidence, he said PSX must demonstrate the highest standards of governance, transparency, ensure the best technology and availability of innovative products, without which it cannot compete in today's globalise stiff competition.
Unfortunately, Hijazi said, in the past, the stock exchanges had not been able to effectively play their role of frontline "regulators", however, with the structural overhauling in place, the PSX must act as an effective "frontline regulator" with complete segregation of its commercial and regulatory functions, under the leadership of a strong and well-governed board of directors. He said the SECP will make all efforts to ensure that the independent directors appointed by it are competent professionals of high integrity and are national-level representatives. Hijazi explained that under the current hybrid structure of the exchange with brokers having 40% ownership of the exchange and proportionate representation on the board, the SECP is hopeful that this model will be a success in the post-integration scenario. However, he clarified, if the same does not work, the SECP will review it in its entirety to devise the best possible way forward.
He informed the audience that because of improved economic indicators and compliance with global benchmarks, the MSCI Pakistan Index has been included in the 2016 Annual Market Classification Review for a potential reclassification to MSCI Emerging Markets. He hoped that with the completion of successful integration of exchanges and other complementary reforms in place, Pakistan will regain the status of Emerging Market at the MSCI platform.
Meanwhile, addressing the ceremony, Munir Kamal, Chairman PSX, said the formation of PSX was a "watershed event" for the country's capital market. He said due to rapidly improving economic situation of the country, not only local investors but the foreign investors were also taking keen interest in Pakistan's capital market.
He said Pakistan's corporate governance performance was close to the world standards and after the formation of one national stock exchange the performance would become better in future. He said there were some flaws in the taxation system. "We would like to present some proposals during the next budget and if the government accepts those proposals, the taxation system would become more improved."
The Finance Minister also highlighted that the government, in line with its consultative and participatory approach, was receptive to proposals from the business community with regard to tax rationalisation and incentives for encouraging new listings and promoting the capital markets. The Finance Minister asked the business community to share proposals to frame incentives to encourage new listings.
Mukhtar Hussain Jaffri, Chairman ISE Board, said the decision of amalgamation of three stock exchanges was made after mutual consultation and agreement and the concerns of stakeholders were addressed. The Chairman, Demutualization Committee ISE, Mukhtar Ahmed Jaffery, Chairman Demutualization Committee LSE Yasser Mahmood, eminent business leader Arif Habib addressed the ceremony of PSX launch.
The ceremony was attended by high-level foreign diplomats, including Chinese, Canadian, Italian and Turkish delegates, as well as senior parliamentarians and prominent members of the brokerage, media and legal fraternity. Other notable speakers on the occasion, included Arif Habib, Ferozuddin Cassim, Muhammad Naeem, Syed Mukhtar Hussain Jaffery and Dr Yasir Mahmood. They appreciated PSX as a milestone achievement for Pakistan. The ceremony was attended by Governor and Deputy Governor State Bank of Pakistan, members of the SECP Policy Board, Chairperson Competition Commission of Pakistan, Chairman National Investment Trust, Chief Executives and board members of PSX and the former exchanges, clearing company, depository company, commodity exchange, and prominent business leaders from the banking, capital market, insurance and non-bank financial sector.
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