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MARKET'S SCOPE AND COVERAGE UNDER SECP.

Byline: S. KAMAL HAYDER KAZMI

Presently Securities and Exchange Commission of Pakistan(SECP), in order to facilitate registration of firms, has been introducing many facilitative gauges from time to time. The Commission has made drastic reductions in registration fee for small firms and filing fee of firms with small capital base. It offers complimentary certified true copy of company formation documents and other statutory returns to the firms upon its registration.

SECP enlarged its outreach through organizing company registration offices in different regions of Pakistan. The Commission enabled same day online incorporation without charging any extra fee subject to adoption of short memorandum of association.

Among other things short memorandum of association of 68 sectors are obtainable on the website, which made it easier for the promoters to incorporate the company by adopting the same.

FINANCIAL PERFORMANCE

Financial results of SECP for the year 2014-15 show surplus of income over expenditure after tax Rs203.78 million as compared to last year's surplus of Rs154.08 million, recording a rise of Rs49.70 million (32%). Total revenues (net of levies) for the financial year 2014-15 are Rs2,483 million, which are higher by Rs469 million (23%) as against to last year's revenue of Rs2,014 million. Revenues of Company Law Division, Security Market Division, Specialized Companies Division and Insurance Division have risen during the year by 34 percent, 41 percent, 12 percent and 14 percent respectively, when compared to last year's revenues. Income from investment has declined by Rs8 million mainly because of decline in discount rate by SBP. Total operating expenses for the year under review are Rs1,932 million explaining a rise of Rs114 million (6%) over the previous year.

The rise is mostly because of increase in cost of utilities, rent expenses, salary and other operating expenses. Capital expenditures for the year remained within the limits as per the approved budget for the year. An amount of Rs11.60 million received as penalties through SECP during the year review and Rs63.424 million as surplus for the year 2013-14 has been transferred to the Federal Consolidated Fund.

CAPITAL MARKET REFORMS

In order to bring IPO (initial public offering) process on a par with the developed markets, revised regulations for book building have been enforced to ensure a user-friendly and transparent model, which also offers financiers with an opportunity to participate in the process electronically.

Secondly, in order to attract new listings, the existing manual procedures for listings have been simplified. Regulatory amendments were accepted to change exchanges' pre-open modalities to curb manipulation during pre-open session.

Considering the immense potential of Small and Medium Enterprises (SME) in capital formation and social growth, the concept of SME Board has been launched at the stock exchanges to facilitate listings. Furthermore, with a view to encouraging development of Islamic capital market, the Shariah Advisory Board has also been reconstituted. It is worth mentioning that stakeholder response to the SECP reforms has been optimistic, which is evident from the fact that in 2014-15 the stock market indices registered a steady growth of 16 percent by opening at 28,701.58 points, and ending at 34,398.86 on June 30, 2015.

In this regard one extraordinary attainment was the launch of South Asia's first ever REIT (Real Estate Investment Trust) valuing at Rs22.237 billion at KSE.

INVESTOR PROTECTION and EDUCATION

Investor protection is the foundation of the SECP's reforms program, and it is the commission's top priority. The introduction of direct settlement service mechanism at the CDC and NCCPL are important initiatives in this direction.

This would prevent unauthorized use of clients' securities by broker participants. Investor account holders at the CDC were offered an online transaction facility for movement of securities. It is also worth mentioning that during the year, firms have been allowed to circulate yearly accounts to shareholders by email, if so desired by any shareholder.

Under its Investor Education Program, the Securities and Exchange Commission of Pakistan is imparting knowledge by the media, seminars and workshops. Fifteen investor awareness seminars were organized in Islamabad, Mirpur, Abbottabad, Peshawar, Muzaffarabad and Rawalpindi.

Keeping pace with the latest trends, awareness about non-banking financial sector and products is also being created by social media. For the youth, in particular for students at schools and universities, a comprehensive outreach program has been rolled out under which MoUs with the partnering institutions are being inked for conducting on campus awareness sessions and to run trading competition on real time feed from exchange.

INSURANCE SECTOR REFORMS

In order to offer sustainable growth to the insurance sector and to address the issues faced through the stakeholders involved therein, the Bancassurance Regulations have been issued along with formation of small dispute resolution committees in Karachi, Islamabad and Lahore, to expedite the insurance sector related disputes resolution process at a little or no cost to the policyholders and that too at their doorstep. Efforts are underway to ensure full compliance with ICPs (Insurance Core Principles) of IAIS (International Association of Insurance Supervisors) by the end of the next financial year. Code of Corporate Governance for Insurance Sector is being developed. In order to raise the insurers' capacity to underwrite and retain risks, thereby serving to retain foreign exchange in Pakistan, the paid-up capital requirements for the insurance sector are to be increased to Rs500 million and Rs700 million for non-life and life insurers respectively.

The SECP has also requested the Finance ministry to get implemented the legally compulsory group insurance by recommending amendments to labor laws to improve the scope of the coverage.
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Publication:Pakistan & Gulf Economist
Geographic Code:9PAKI
Date:Nov 6, 2016
Words:1004
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