ISLAMABAD: The pandemic has marred development in 2020 and has created unprecedented challenges for economies worldwide. Being the apex regulator of the corporate sector and capital markets in Pakistan, “the lives-versus-livelihood trade-off” has been a very real concern for the Securities and Exchange Commission of Pakistan (SECP).
As a result, to boost investment and to create further financial depth in the stock exchange, the SECP – with the assistance of Asian Development Bank (ADB) – has developed an ambitious ‘Capital Market Development Plan 2021-27’.
The plan has been given approval by the government and a high-level council mandated to oversee implementation of the plan has also been constituted; comprising Minister of Finance, Federal Finance Secretary, Governor State Bank of Pakistan (SBP) and Chairman SECP. The plan focuses on strengthening market stability, improving market facilitation, enhancing the supply and demand of securities, and strengthening market infrastructure.
Regarding amalgamation of Securities and Futures Law to promote growth of capital markets, the introduction of a simplified and sound regulatory environment is the need of the hour. In this regard, the SECP has been undertaking the task of amalgamation of Securities Act, 2015 and Futures Market Act, 2016, to have a unified umbrella legislation for the securities and futures market in line with global best practices.
On the issue of Professional Clearing Member (PCM), regulatory framework for PCM will be introduced and efforts will be made to develop and implement PCM model for bringing independent third party custodial service providers for facilitation of the brokerage industry and the development of overall capital market while enhancing investor protection.
Globally, derivatives serve as an important medium for providing variety of investment alternatives to investors. In this regard, necessary steps are being taken to develop derivatives market with particular focus on cash settled products. Further, efforts are being made to revamp the existing leveraged products for removing anomalies and increasing ease of access to credit in the capital market.
On the issue of the introduction of perpetual license of Non-Banking Financial Companies, various amendments have been proposed in the NBFC Rules, 2003, including introduction of perpetual license of NBFCs instead of 3 years, undertaking various licensed activities by a single NBFC, rationalised procedure for formation of NBFC and provisions regarding specification of capital adequacy requirements, etc. Additionally, revisions have been proposed in NBFC Regulations, 2008, VPS Rules, 2005, REITs Regulations, 2015, to further facilitate investors and further SECP’s efforts towards ease of doing business. Moreover, work has also been initiated on a new dedicated and consolidated regulatory framework in the form of ‘NBFC Law’ for the regulation of NBFCs and CIS. The promulgation of new law will stimulate market development, upgrade applicable prudential and supervision requirements and enhance investor protection.
On Extensible Business Reporting Language (XBRL) based Financial Reporting, SECP, in collaboration with various stakeholders, has been striving for implementation of the Extensible Business Reporting Language (XBRL) based financial reporting. The XBRL based reporting would facilitate digital storage of the financial reports and facilitate the investors, bourses, and regulators to review and evaluate financial data more easily and efficiently for informed decision making. The pilot run of XBRL is expected by close of next financial year.
With regard to Ease of Doing Business, SECP is collaborating with banks to provide facility for opening bank account through SECP eServices at the time of Company Incorporation. It is also developing an online portal for all the electronic submissions i.e AGM notices, financial statements– interim or annual which are currently being submitted electronically on the designated email addresses. It is also developing and Online Portal OR System for Reporting of Investments out of the Employees Contributory Funds’ by companies.
Furthermore, SECP is establishing a data exchange mechanism with Pakistan Single Window, an initiative taken by the Federal government through Pakistan Customs and Federal Board of Revenue to introduce e-governance in the external trade sector.