The Securities and Exchange Commission of Pakistan (SECP) has released a Consultation Paper on Standard Principles for the Recognition and Conduct of Industry Associations. This initiative introduces a strategic framework to enhance Pakistan’s financial sector through improved self-regulation.
In an evolving regulatory landscape, industry associations are no longer limited to their traditional role as advocacy bodies. Globally, these associations are recognized as key players in economic development by engaging in policy dialogue, supporting regulatory compliance, and promoting responsible industry practices, according to a press release issued by the SECP.
The proposed framework outlines a clear path for eligible industry associations to transition into Self-Regulatory Organizations (SROs) within the next three years. These SROs will have the authority to establish ethical standards, monitor industry conduct, enforce compliance, and drive sector-specific initiatives in alignment with SECP’s broader regulatory goals.
Key aspects of the proposal include the mandatory conversion of trade associations into Section 42 companies under the Companies Act, 2017, ensuring their operation as not-for-profit entities. This step is designed to enhance transparency, strengthen governance, and maintain financial integrity.
The framework also aligns with international best practices, highlighting the importance of diverse, merit-based membership, strong governance, conflict-of-interest safeguards, stakeholder engagement, fair dispute resolution, and ongoing investment in training and investor education.
The SECP further encourages the formation of specialized associations within regulated sectors, each focused on specific sub-sectors. This targeted approach ensures that each sector’s unique operational challenges and compliance needs are effectively addressed.
This initiative reflects SECP’s commitment to fostering a transparent, accountable, and competitive financial ecosystem. By transforming industry associations into functional SROs, the Commission aims to strengthen market integrity, boost investor confidence, and promote sustainable sectoral growth.
