Money laundering - developing procedures for detection

The Securities and Exchange Commission of Pakistan (SECP) is developing procedures for detection of money laundering practices which may be conducted through the stock exchange by seeking assistance of Federal Investigation Agency (FIA), National Accountability Bureau (NAB), State Bank of Pakistan (SBP), National Database and Registration Authority (NADRA), Federal Board of Revenue (FBR) and Pakistan Telecommunications Authority (PTA).
The SECP's 'Capital Market Development Plan' said that SECP intends to develop procedures which can lead to detection of money laundering practices which may be conducted through the stock exchange. Additionally, insider trading has been made a criminal offence under the Securities Act, 2015, in line with global best practices, to discourage and deter such market abuses and malpractices which can jeopardise investors' interest. For this purpose assistance from other regulatory entities such as the FIA, NAB, SBP, NADRA, FBR and PTA, etc, will be sought, in order to detect such malpractices and take joint action, for restoration of investor confidence.
Implementation of Market Halts and Widening of Scrip Level Circuit Breakers: Considering the scrip level circuit breakers applicable at the stock exchange are too narrow and inhibit efficient price discovery preventing investors from easy exit from the market, it is in consideration to gradually widen existing scrip level circuit breakers and introduce index based market wide co-ordinated trading halts which will facilitate exchange in collection of margins before resumption of trading. Such halts will be implemented at the exchange in line with international practices. The same shall enable efficient price discovery in the market without compromising on risk management.
Strengthening surveillance capacity of the stock exchange: To enhance the monitoring and surveillance capabilities of the stock exchange, surveillance software at the PSX will be enhanced through inclusion of similar functionalities as embedded in the market surveillance suite being employed by the SECP.
New Product Development: Possibility of introduction of new products and systems aimed at increasing efficiency of the exchange, depository and clearing companies will be assessed. These include development and implementation of a model for Professional Clearing Members (PCMs) which will perform custody and settlement functions for the Trading Only category of brokers, as required under the categorisation of brokers. NCCPL, CDC, or the banks may act as such PCMs under defined parameters.
Further, in line with international best practices, the possibility of CDC introducing services such as e-voting, e-notices, insurance repository, academic repository, corporate management and investor relations portal will be assessed. Also, the NCCPL will act as a Centralised KYC Organisation as also explained in the next section under market intermediaries.
At the PSX, two tier listing boards for companies based on their free float will be established. Also, the benchmark KSE-100 index which is presently skewed towards a few bluechip stocks because of their large weightage and low volumes will be reviewed in light of global best practices to remove the said anomaly and to reduce chance of manipulation of index and movement with relative ease.
Capacity building of SROs for effective enforcement: To put in place a strong culture of compliance and enforcement, emphasis would be placed on human resource quality and capacity building of the frontline regulators. The SROs will be required to hire and retain dedicated and qualified staff, adhering to highest ethical and professional standards, for the purpose of their regulatory, surveillance and enforcement activities, the SECP added.