The Securities and Exchange Commission of Pakistan (SECP) Policy Board has given approval to several proposed amendments to the SECP Act, 1997, Public Sector Companies (Corporate Governance) Rules, 2013, NCCPL Regulations as well as the Pakistan Stock Exchange (PSX) Rules Book.
The Securities and Exchange (SECP) Policy Board met here at the SECP Headquarters under the chairmanship of Professor Khalid Mirza.
The Board reviewed the implementation status of the decisions given by it over the last three meetings which included a substantial reduction in fees and removal of annual renewal of intermediary licences for the 'ease of doing business.' It was noted that the Commission had not executed the instructions of the Board in an expeditious manner which is a source of concern. Concern was also expressed with regard to the Commission's perceived excessive involvement with law enforcement agencies. With regard to the number of Board decisions pending implementation, Professor Khalid Mirza emphasized the need for taking effective measures expeditiously in line with the policy directives. He envisioned if the Commission faithfully works alongside the Board, the Commission should get transformed into an effective and market friendly regulator, and the capital market put on a path of sustainable development within a year or so. It was thus hoped that within three or four years, the goal of a viable capital market would be achieved.
On the recommendation of its Regulations Committee, the Board gave approval to several proposed amendments in the SECP Act, 1997, Public Sector Companies (Corporate Governance) Rules, 2013, NCCPL Regulations as well as the Pakistan Stock Exchange (PSX) Rules Book. The Policy Board also gave its approval for other matters recommended by the Regulations Committee.
Similarly, the Oversight Committee of the Board gave its recommendations pertaining to the surveillance software of the Commission, regulatory powers for imposing penalties for market malpractices without going to Court, disclosure of non-compliance/misconduct by brokers, empowering the SECP to tackle issues of financial crime without having to resort to other law enforcement agencies, and other matters. These were agreed to by the Board.
Professor Khalid Mirza stated that that the Board is focusing on the lacklustre insurance industry and disclosed that the Board has favoured a risk-based supervision approach where high-risk insurers are treated separately from the low-risk insurers. He was of the view that capacity building measures including basic insurance trainings on a regular basis are conducted. The Insurance Committee of the Board also recommended certain measures including removal of sales tax provisions for facilitating insurance business which were agreed to by the Board.
The SECP Policy Board, in pursuance of Section 12 of the SECP Act 1997, comprises ex-officio members of the ministries of finance, commerce, and law, SBP and SECP and persons of eminence from the private sector. When contacted, Chairman SECP Policy Board Professor Khalid Mirza said, "The Commission has not been able to get its act together probably because of the capacity reasons and a spate of policy decisions of the board remains unexecuted. It is important for the Commission to keep pace with the board. My fear is that my aim of achieving within a year a functional regulator i.e. firm, helpful and fair along with capital market poised to go places will not materialise and we will not see real results on the ground within the term of the current board as visualized by me. I am also deeply concerned that the Commission is unnecessarily involved with law enforcement agencies, which is contrary to sound regulating practices since these agencies have a style of working which is not conducive for the development of the capital market." He warned if this continues, market players and investors are likely to shy away from the market. The involvement with the law enforcement agencies is not only hurting the writ of the regulator but also demonstrates regulator failure, he added.
Furthermore, it is noted with concern that a number of recent regulatory notifications issued by the Commission were either basically unlawful or procedurally flawed and had been issued without prior consultation with the policy board and after hearing, the people were given the required opportunities for comments, he said. An example in this regard is recent relaxation granted for female membership of the corporate board, Mirza added.