SECP board approves amendments in Exchange-Traded Fund

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ISLAMABAD: The Securities and Exchange Policy (SECP) Board, which met under the chairmanship of Prof Khalid Mirza on Wednesday, approved necessary regulatory changes required in the Pakistan Stock Exchange rule book to facilitate the operations of the Exchange-Traded Fund (ETF) product in Pakistan

The policy board welcomed the new SECP Chairman Aamir Khan and accredited his joining to the improvement in the stock market and development of new initiatives. The board reviewed the implementation of its decisions of previous meetings and was satisfied with the overall workings of the commission. The chairman and the board commended Aamir Khan for ensuring that the decisions were implemented in an expeditious and progressive manner.

In order to facilitate the launch of ETF product, the policy board, among several other recommendations of the regulations committee, approved amendments in the ETF regulations which have been revamped to add flexibility for fund managers to appoint separate intermediaries to perform the functions of market makers and authorized participants.

This shall enable fund managers to take onboard market makers easily which are now subject to rationalized regulations that aim to reduce cumbersome requirements and decrease the cost of doing business for market makers.

In addition to regulatory changes, system-level modifications have also been made to enable market makers to perform their functions seamlessly with minimum inventory. The approved regulatory amendments aim to provide maximum facilitation to fund managers and market makers through streamlined regulatory requirements based on international benchmarks.

Other approvals of the policy board included amendments in Futures Brokers (Licensing & Operations) Regulations, 2018, which provided relaxation in education requirement of CEO, elimination of the requirement of NCB, deletion of the requirement of wealth statement, and reduction in the frequency of reports by the compliance officer.

The board also made amendments in the Securities Brokers (Licensing & Operations) Regulations 2016, extending the timeline to comply with financial resource requirements till December 2019, and deleting the requirement to submit the certificate of commencement of business.

Amendments were also made in CDC Regulations – Reforms in CDC Regulatory Framework for ease of doing business by direct credit of securities in the CDS issued by way of right issue of public unlisted and private companies; relaxation in the appointment of independent Transfer Agent by private and single-member companies.

The board mandated the PSX to act as the sole frontline regulator and may draw upon the assistance of NCCPL and CDC to outsource the compliance function of PSX, to the extent of supervision or conducting any investigation, inspection or enquiry and monitoring compliance of securities brokers.

The policy board was also given a presentation by the commission pertaining to the implementation of the FATF recommendations including instances of penalties imposed in various cases.

The policy board directed that the FATF guidelines should be followed but the focus should remain on the areas that are critical to curb the menace of financing of terrorism/money laundering.

The Securities and Exchange Policy Board, in pursuance of Section 12 of the Act 1997, comprises ex-officio members of the ministries of finance, commerce, and law, SBP, SECP and persons of eminence from the private sector.

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