ISLAMABAD: The federal cabinet on Tuesday approved the extension of the Securities and Exchange Commission of Pakistan (SECP) Chairman Aamir Khan’s tenure for another three years.
This is a first in the history of the SECP that a sitting chairman has been awarded an extension. Aamir Khan was appointed as SECP commissioner in December 2018 and was later elevated to the post of chairman in August 2019.
As per details, Advisor to Prime Minister on Finance and Revenue Shaukat Tarin apprised the federal cabinet on significant reforms featuring legal, structural, regulatory, operational and product development initiatives by the SECP during the last three years in a bid to further the government’s vision of improving ease of doing business (EODB), expanding financial inclusion, digitising corporate processes, developing capital market and strengthening the enforcement of laws.
According to officials, the Cabinet was informed that SECP has achieved end-to-end digitalisation of the company registration process, which has resulted in a growth of nearly 60 per cent in the number of registered companies over the past three years, accumulating to 156,000 companies as of November 30, 2021, from 93,000 in December 2018.
In order to simplify, speed up and make enforcement and supervision effective, the SECP has separated the functions of supervision and adjudication by establishing two centralised autonomous divisions. All the SOPs and processes related to the initiation and conclusion of regulatory enforcement actions were revamped for ensuring independent adjudication and supervision.
In collaboration with the PSX, the commission introduced an alternative board, the Growth Enterprise Market (GEM), to encourage smaller companies to list equity securities and avail the benefits of listing at the exchange. The first SME was successfully listed at the GEM board last week.
The Cabinet was informed that SECP introduced the electronic-IPO system in coordination with the Central Depository Company (CDC). Through the said system, investors can submit IPO applications electronically and make subscription payments through e-banking channels. The simplification of the IPO process resulted in eight equity and two debt-IPO issues taking place during the year. The companies raised Rs56 billion through IPOs in 2020-21 (FY21), the highest in the last 10 years.
Moreover, the SECP introduced Exchange Traded Funds (ETFs) in the capital market, for which the definition of investment advisory services was amended to enable brokers to launch low cost ETF. PSX has successfully launched two Exchange-Traded Funds (ETF), which will uplift investor base in the capital market by providing a new, low cost and well-diversified investment avenue for the investors.
For enhancing the EODB and strengthening market participants, measures have been taken to reduce market costs for which fee structure of the PSX, CDC and NCCPL have been rationalised. In order to enhance investor outreach, a framework has been stipulated for enabling online account opening. Further, to increase the retail base, a simplified account opening process has been introduced for low risk investors whereby maximum investment limit of Sahulat Account has been enhanced from Rs500,000 to Rs800,000. These steps resulted in an increase of 14,000 new investors witnessed at PSX.
Furthermore, SECP is in the process of implementing the new trading engine at the PSX which will improve trading operations of the stock market, but also lead to a much stronger surveillance system of the front-end regulator by December.
According to officials, for improving financial inclusion, growth of the private sector, SECP also launched the Secured Transactions Registry (STR) which will be used for registration of security interests/charges created by entities other than companies on their movable assets such as receivables, intellectual property, inventory, agricultural products, petroleum or minerals, motor vehicles, etc.
SECP’s regime for regulating financial institutions has been rated as largely compliant in FATF’s action plan, eight out eight action items, and 54 out of 54 recommended actions in the Post Observation Period Report of the Mutual Evaluation Report as a result of these reforms undertaken by the SECP.
To promote documentation and corporate investment in the real estate sector, the SECP has amended the REIT regulations, triggering a number of REIT management license requests and REITs schemes applications.
Similarly, to provide ease of doing business to startups, private companies and SMEs were permitted to raise capital by receiving immovable property, intangible assets and services, instead of only cash and were allowed to offer employee stock option plans to employees.
Moreover, SECP e-Services is integrated with the Federal Board of Revenue (FBR) and the Employees Old Age Benefits Institution (EOBI) at the federal level and with business registration portals of Punjab and Sindh at the provincial level.