KARACHI: Two commissioners of Securities and Exchange Commission of Pakistan (SECP), Akif Saeed, Fida Somoo and former chairman Zafar Hijazi completed their tenures and have been discharged from their duties.
Currently, SECP has two Commissioners, Zafar Abdullah, who is also performing duties as the acting chairman of the SECP, and Tahir Mehmood. The federal government had already advertised the post of the commissioners and carried out some interviews to fill these vacancies. The sources claimed that the federal government has to appoint almost 5 commissioners.
Many brokers informed that commissioner Akif Saeed with the former Chairman Zafar Hijazi has destroyed the equity market in Pakistan by enforcing unnecessary regulations on stockbrokers and the market.”
The market which had touched 53,127 points on May 25, 2017, crashed by 28 per cent to 38,192 points till December 15, they added. The market was down after the budget announced by Ishaq Dar for 2017-18 in which the federal government increased taxes on payouts of mutual funds, extension in super tax higher turnover tax, said an analyst.
If we recall the tenure of Akif Saeed as Commissioner SMD, the most significant aspect was the introduction of a bundle of regulations on a weekly basis. The changes in such regulations were also very frequent, generally started within a month of promulgation.
The sources claimed that another landmark which should be attributed to Saeed was filing criminal complaints against stockbrokers, giving the impression to investing community that every second broker is a criminal.
Despite this continued decline and erosion of billions of rupees value in the last seven months, the SECP remained focused on enforcing new regulations on stockbrokers and investors on weekly basis and frequently filing criminal complaints.
Sources pointed out that the latest incident happened in the last week when SECP introduced a new KYC form with a very short implementation time which resulted in panic in the market and pacified when the implementation time was extended to March 31, 2018, only when the Acting Chairman SECP intervened.
Saeed was also instrumental in introducing multiple licensing regimes during the last two years and these licenses are generally issued/renewed within eight to ten months as the process is highly tedious, voluminous and time-consuming.
Recently he intended to make the management rating mandatory for each brokerage house. This is yet to be implemented, however, this move has been taken very negatively among the market participants.
Zafar Hijazi and Akif Saeed’s partnership was more of a publicity stunt, the source added. They claimed to have been the only reason for Pakistan’s re-entry into the emerging market. However, the reality is that they made frequent changes in the regulatory framework and made them more stringent resulting in the closure of fifty odd brokerage houses and an extraordinary increase in the cost of doing business.
During this regime no new product was introduced and no efforts were made to re-energise liquidity in the market in such tough times. In this period trading data leakage was at its peak and no meaningful action was taken by the SECP, sources added.
Akif Saeed was appointed as Director in SECP in 2004-05 and served with the SECP since. The sources argued that Akif only had experience with a foreign bank branch at the junior middle management level. He never worked anywhere at a senior level except for in SECP wherein thirteen years he reached the position of Commissioner. The SECP law says that the majority of the Commissioners should be from the private sector. It is important to consider that Securities Market, NBFIs and Insurance are very technical areas requiring high professional expertise and hands-on experience in the industry.
In these hyper-technical sectors, home-grown SECP professionals who do not even have the basic operational understanding of market intermediaries should not be given the charge.
The GOP should ensure that future appointments should be highly competent and have extensive industry background with practical and hands-on experience.
Sources concluded that SECP’s initiative to make the board “brokers free” and independent front-line regulator under the Hijazi regime has failed miserably.
