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Chairman Securities and Exchange Commission of Pakistan (SECP) Aamir Khan has strongly stressed the need for developing a strong network of capital market regulators in the Central Asia Regional Economic Cooperation (CAREC) and strengthening regional cooperation to promote more effective and efficient cross-border trade and investments.
Addressing the first 'Central Asia Regional Economic Cooperation (CAREC)-Capital Market Regulators Forum' organised here on Thursday, he emphasised the use of technology for growth and economic integration in line with the vision of the federal government.
The forum has been jointly organised by the Securities and Exchange Commission of Pakistan (SECP), Asian Development Bank (ADB), Central Depository Company (CDC), and National Clearing Company of Pakistan Limited (NCCPL) from 29 to 30 August 2019 attracted high-level officials, including Adviser on Finance Abdul Hafeez Shaikh, SECP Chairman Aamir Khan, ADB Vice-President Shixin Chen, and more than 150 regulators from the CAREC region.
Capital market regulators from members of the Central Asia Regional Economic Cooperation (CAREC) met for the first time to discuss ways on how to improve capital markets by enhancing access to finance, supporting private sector development, spurring economic activities, and strengthening regional cooperation and integration.
The financial sector in most CAREC countries remains dominated by traditional financial institutions such as banks. Capital markets in the region are also lagging behind with some CAREC members ranked low in market capitalization, according to the 2018 Global Competitiveness Report. Improved capital markets can unlock much-needed resources to boost economic growth and help achieve sustainable development, while strengthening regional cooperation that promotes more effective and efficient cross-border trade and investments.
"This forum underscores the need to build strong and meaningful cooperation among our capital markets," said Chen. "The region needs much more financing and investments than public sector resources can alone provide. Mobilisation of private sector funds, including through capital markets and long-term institutional resources, is critical to meeting development financing gaps of the CAREC region."
The forum included panel sessions and open discussions covering country case studies, as well as specific topics such as lessons from capital markets integration, derivative market development, and Fintech's regulatory and regional implications. Representatives from ministries of finance, central banks, capital market supervisory bodies from all CAREC countries, and relevant industry professionals participated as panellists in the various sessions to share and discuss best international practices with the participants.
The CAREC programme is a partnership of 11 countries - Afghanistan, Azerbaijan, the People's Republic of China, Georgia, Kazakhstan, the Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan - to promote economic growth and development through regional cooperation. Several international development partners, including ADB, International Monetary Fund, United Nations Development Programme and the World Bank, support the activities of CAREC. The ADB hosts the CAREC Secretariat in its headquarters in Manila.
Since its inception in 2001, CAREC Programme has invested heavily in improving regional connectivity, promoting energy trade, and facilitating regional trade, with a total financing of almost $34 billion. In 2017, a new long-term strategy-CAREC 2030-was adopted by the 11 countries. This strategy expands the objective of the program to strengthen economic and financial stability, including through promoting cooperation among capital markets and strengthening the investment climate in Central Asia.
The ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members-49 from the region.
In his welcome speech, Aamir Khan noted that the forum included panel sessions and open discussions covering country case studies as well as Pacific topics such as lessons from capital markets integration, derivative market development and Fintech's regulatory and regional implications. Representative from Ministry of Finance, Central Bank, capital market supervisory bodies from all CAREC countries, and relevant industry professionals participated as panelists in the various sessions to share and discuss best international practices with the participants.
"You have arrived in Pakistan at a very exciting time, when we are going through a transformation. Transformation that brings in its wake challenges, but more importantly, opportunities, as well. These opportunities become even more interesting due to the combination of three factors," the chairman SECP said.
Firstly, Pakistan has progressive economic policies that incentivise foreign portfolio investment. For instance, 100% foreign ownership is allowed without any repatriation restrictions. Foreigners can freely buy and sell in the securities market. Extremely simple entry requirements have been refined over the period of time for foreign investors, Aamir Khan said.
Secondly, the present government has a vision for use of technology to serve the public at large. Thirdly, young urban class demographics coupled with a spirit of entrepreneurship provides opportunity for innovation and qualified workforce for start-ups.
The role of technology as an enabler for the capital market regulators and participants alike cannot be overemphasised, said the SECP chairman.
Aamir Khan said that the SECP in line with the government's policy vision has initiated digital transformation under the project Leading Efficiency through Automation Prowess (LEAP). LEAP entails end to-end automation and digitisation.
"While control and risk management are crucial, it is vital that we must not forget that regulation is not unidirectional; while controls and risk management are crucial, so are the growth and development of industry." Regulators need to be firm yet fair. Regulations must instil a culture of compliance and accountability, but at the same time deliver on the promise of efficiency, resource optimisation and encourage healthy risk taking for economic growth.
Furthermore, the positive influence of any regulation developed in isolation in today's globalised environment is diluted. To appeal to a pool of stakeholders beyond geographical boundaries, regulations today must consider cross-border facilitation, reflect a regionally harmonised approach and support ease of doing business and bring down archaic and redundant barriers, Aamir Khan stated.
"We must pursue integration, develop a facilitative environment that enables harmonised listing requirements, standardised trading and settlement procedures and conducive regulation of cross-border investment activities," added the chairman SECP.

Copyright Business Recorder, 2019

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