SECP's Capital Market Reforms Ensure Provision Of Complete Eco-system: Report

ISLAMABAD, (UrduPoint / Pakistan Point News - 24th Jun, 2022 ) :Security and Exchange Commission of Pakistan's (SECP) capital market reforms are focused to ensure provision of complete eco-system desirable for the capital formation.

According to the SECP Annual Report, SECP continuously seeks feedback from IOSCO member countries, in addition to independent research of the international legal standards and best practices.

As part of SECP's digital transformation agenda, investors have been facilitated to seamlessly open their accounts with a broker from anywhere in the country without requiring to submit any documents physically or visit a broker.

The report said that in order to ensure maximum investor protection, an online customer verification process has been introduced for opening of online accounts.

This online verification will be conducted independently by the Centralized KYC Organization. These measures would improve investor participation in our capital market and grant country wide access to investors.

Pursuant to the launch of Non-Resident Pakistanis (NRPs) Rupee value (NRV) Account under Roshan Digital Account (RDA) initiative, NRPs can invest in listed shares and open accounts with capital market intermediaries on the basis of KYC information submitted to the banks.

Requisite regulatory amendments were made and operational system was implemented for sharing of KYC information and opening of trading accounts. As a result, NRPs can electronically open their trading accounts with brokers from anywhere globally without submission of any physical documents. This has encouraged investment in our capital market, report added.

For opening of trading account, NRPs or foreigners were required to submit documents duly attested by Consul General of Pakistan having jurisdiction over the applicant in terms of Centralized Know Your Customer (KYC) Organization (CKO) Regulations, 2017 (CKO Regulations).

However, during COVID-19 pandemic, NRPs and foreigners faced practical difficulties in getting their documents attested for opening of trading accounts.

Amendments were therefore introduced in CKO Regulations with an option of 'Notarization' to allow NRPs/foreigners to get attestation by either notary public or Consul General of Pakistan.

This measure has facilitated NRPs or foreign investors to comply with regulatory framework and enabled them to invest in Pakistani capital market.

These steps would encourage NRPs and foreign investors to invest in our capital market with ease, leading to increased FPI and enhanced investor base.

The Centralized CKO performs independent verification of information of all new customers.

Necessary amendments in respective regulatory framework were made to address the practical difficulties faced by market participants and investors and to make the process more seamless, which include allowing company provided mobile number for opening of account and facilitating Asset Management Companies, group of companies and International Broker Dealers in using single UIN in respect of multiple accounts.

Further, in order to enhance ease of access for investors, amendments have been approved in the psx Regulations requiring listed companies to use PSX's AGM Calendar.

This would enable companies to reduce overlap in holding their AGMs thus enabling shareholders to participate in the meetings.

Requisite amendments have been carried out in regulations of PSX and Central Depository Company of Pakistan Limited (CDC) to enable the capital market infrastructure institutions to utilize shares of a defaulting broker lying in its house account. Proceeds from the sale of such shares would be available to settle the broker's outstanding obligations including settlement of investor claims.

Regulatory requirements applicable on the governance structures of the market infrastructure institutions have been revamped by reducing the size of PSX Board, aligning the number of independent directors on the Board, instituting assessment of board and senior management, issuing guidelines for appointment of independent directors, rationalizing qualification and experience requirements of the senior management etc.

Necessary amendments were also made in the PSX Regulations for delegation of operational powers of PSX Board to its Chief Executive Officer and Chief Regulatory Officer.

Necessary amendments have been made in PSX Rulebook for launching 90 days deliverable futures contracts with enhanced eligibility criteria for selection of securities for futures contracts. Such measures aim to bring efficiency in the product, align the product with international practices and reduce systemic risk.