Licensing, operations of securities, futures' advisers: SECP seeks comments on regulations

In line with its efforts to strengthen the capital market and as part of subsidiary legislation under the Securities Act, 2015, and the Futures Market Act, 2016, the Securities and Exchange Commission of Pakistan (SECP) has drafted the Securities and Futures Advisers (Licensing and Operations) Regulations, 2016. The SECP has published the regulations in the official gazette and also placed the same on its website at https://www.secp.gov.pk/laws/draft-for-discussion/draft-rules-regulations for eliciting public comments.
The regulations have also been disseminated among various prominent stakeholders for consultation purposes. Comments received on the regulations within 15 days from the date of notification will be considered. The draft regulations provide for matters relating to licensing, financial resources, duties and obligations, conduct, and audit and accounts for persons providing investment advice or recommendation to customers on securities and futures contracts.
The regulations also specify fit and proper criteria for sponsors, directors and chief executive/head of advisory business of an entity desirous of undertaking securities or futures advisory. Focus has been kept on specifying educational qualifications, experience and certification requirements for relevant employees of entities providing advice to investors to promote benchmarking, standardisation and transparency. Further, specific requirements will be imposed on securities and futures advisers regarding management of conflict of interest, confidentiality of clients' information, and ensuring clients' risk profiling and suitability of the advice/recommendation given to clients, through the regulations.
Existing entities already providing advisory will be given six months from the date of promulgation of the regulations to obtain license as a securities/futures adviser for continuation of their business. It is expected that the new regulatory framework for advisers would promote transparency, standardisation and improved controls for the advisory business, thus strengthening investor protection.-PR