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SECP chief stresses need to strengthen regulatory environment

News: SECP chief stresses need to strengthen regulatory environment
Publication: Business Recorder
Date; October 26, 2012
Web Address:- http://www.brecorder.com/market-data/stocks-a-bonds/0/1252242/

SECP chief stresses need to strengthen regulatory environment

October 26, 2012

RECORDER REPORT

Security and Exchange Commission of Pakistan (SECP) Chairman Muhammad Ali said here on Thursday that there is strong need to strengthen the regulatory environment in Pakistan to develop the corporate sector on modern lines. He was addressing the participants of a workshop “Economic Reporting on Financial Development Index,” organized by the SECP here on Thursday. AGAHI and CIME were the collaborating partners for the event.

The workshop was aimed at briefing the business journalists regarding ways and means of analyzing various economic indicators. Amir Jahangir, CEO Mishal, Mrs Puruesh Chaudhry, CIME Ambassador to Pakistan. Senior journalists Amir Zia and Ehtesham-ul-Haq gave their presentations on reporting of economy.

Briefing the journalists on financial market reforms and regulatory framework of the SECP, Muhammad Ali said that the SECP is busy in establishing high standard of governance across the capital market to cement investor confidence. Muhammad Ali said that in past the government attitude was not to allow small and medium size companies and risky ventures which result in accumulation of assets with banks and national savings. He pointed out that in Pakistan, banking sector and National Savings have 90 per cent of total assets of the financial sector. Oftentimes, entrepreneurs are not entertained by our banking -centric financial system and it is not possible to generate money from other sources.

In a bid to enhance access to finance and develop a debt capital market, the SECP has introduced various new concepts like SME exchanges, pension schemes, micro-insurance for crops and livestock and commodity trading facility to mutual funds, where the small investors could utilize their savings.

 

He emphasized the need for raising people awareness and education regarding capital market and mentioned that during last one decade the return percentage was 20 per cent in gold and it was 30 per cent for investment made in stock market. The other areas, where the SECP has been focusing on are access to capital, widening of product portfolio in stock exchanges, good governance and reforms and improving the standards of human resources of capital market.

SECP Chairman said that the capital market needs infrastructure development through provision of strong distribution networks. In Pakistan, financial inclusion, one of the lowest in the region, is only 14 percent in comparison with Bangladesh 30 percent, India with 45 percent and Sri Lanka with 60 percent. In terms of distribution, we have less than 200,000 investors, ie 0.1 percent of our total population. Of these, 80 percent reside in Karachi, Lahore and Islamabad. Asset Management Companies (AMCs) and brokers have less than 200 branches nation-wide, while in contrast, the National Stock Exchange (NSE) in India has presence in 3,150 cities, AMCs and brokers have 34,000 branches and around 250,000 access points are available to investors. We intend to encourage the introduction of a sub-broker regime, and to capitalize on automation technologies, including mobile phones and the internet, he added.

The SECP has revived the Corporate Law Review Commission (CLRC) to draft a new company law to modernize and reform the existing regime of the regulation of corporate sector. The CLRC is working to finalize the draft of the new Company Law for Pakistan by September next year for public consultation and subsequent approval from the Parliament. The Securities Bill, pending with Parliament since October 2011, was introduced with a view to bring about much needed structural and legal reforms in the capital markets, SECP Chairman added.

Amir Jahangir, CEO Mishal briefed the participants about the procedure adopted by the World Economic Forum to put in place Financial Development Index. Amir said that the Index assembles a vast amount of data to create an assessment of the different aspects of complex financial systems, including the institutional environment, the business environment, financial stability, banks, capital markets, and overall capital availability and access.

Senior journalist Amir Zia encouraged the journalist to use social media to report their news. He said that the Pakistan has lost its position in World Financial Index in years past and journalists should report on reasons that are contributing to decline in Pakistan’s ranking in Global Financial Index. The interactive session covered various subjects including editorial balance and content evaluation, scope of business reporting in Pakistan and economic reforms.

Recently, the Global Competitiveness Report (2012-13) issued by the World Economic Forum has appreciated the performance of the Securities and Exchange Commission of Pakistan (SECP) as the SECP has been ranked 55th in 2012-13, as compared to 70th in 2011-12. He said that time is right for development of debt capital market for which State Bank of Pakistan, Ministry of Finance and SECP should take initiative. “We need to develop debt capital market in the country”, he said. The investment in Pakistan’s stock market would help availability of capital for industrial sector and would help achieve rapid industrialization and job creation in the country, SECP Chairman added.

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