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a modern and efficient corporate sector in and a capital market based on sound regulatory principles, in order to foster economic growth and prosperity.
The Establishment of the Commission:
The Securities and Exchange Commission of Pakistan (SECP) was set up in pursuance of the Securities and Exchange Commission of Pakistan Act, 1997. This Act institutionalized certain policy decisions relating to the constitution and structure, powers, and functions of the SECP, thereby giving it administrative authority and financial independence in carrying out its regulatory and statutory responsibilities. The SECP became operational in January 1999 and has come a long way since then. It was initially concerned with the regulation of corporate sector and capital market. Over time, its mandate has expanded to include supervision and regulation of insurance companies, non-banking finance companies and private pensions. The SECP has also been entrusted with oversight of various external service providers to the corporate and financial sectors, including chartered accountants, credit rating agencies, corporate secretaries, brokers, surveyors etc. The challenge for the SECP has amplified manifold with its increased mandate. Vision: The development of modern and efficient corporate sector and capital market, based on sound regulatory principles, that provide impetus for high economic growth and foster social harmony in the Country. Mission: To develop a fair, efficient and transparent regulatory framework, based on international legal standards and best practices, for the protection of investors and mitigation of systemic risk aimed at fostering growth of a robust corporate sector and broad based capital market in Pakistan. Strategy: To develop an efficient and dynamic regulatory body that fosters principles of good governance in the corporate sector, ensures proper risk management procedures in the capital market, and protects investors through responsive policy measures and effective enforcement practices.
The SECP Act 1997 An Act to provide for the establishment of the Securities and Exchange Commission of Pakistan and to provide for matters connected therewith and incidental thereto. WHERE AS it is expedient to provide for the establishment of the Securities and Exchange Commission of Pakistan for the beneficial regulation of the capital markets, superintendence and control of corporate entities
l. wings or such other sub-divisions as it may consider expedient. conducting investigations in respect of matters related to this Act and the Ordinance and in particular for the purpose of investigating insider trading in securities and prosecuting offenders. supervising and monitoring the activities of any central depository and Stock Exchange clearing house. the Modaraba Companies and Modaraba (Floatation and Control) Ordinance. the functions and powers set out in the Schedule to this Act. identify the matters requiring the Board to make policy decisions and may also make recommendations regarding policy to the Board for its consideration. calling for information from and undertaking inspections. c. i. having regard to its functions and to exercise its powers efficiently. the Securities and Exchange Ordinance. including changes to the constitution. including unit trust schemes. proposing regulations for the registration and regulating the working of collective investment schemes. from time to time. g. portfolio managers. leasing companies and other NBFIs. 2. sub-brokers. b. trustees of trust deeds. . conducting inquiries and audits of the Stock Exchanges and intermediaries and self-regulatory organizations in the securities market. f. Stock Exchanges or clearing houses. 4. conducting research in respect of any of the matters set out in this sub-section.[Omitted] p. The Commission may. regulating the business in Stock Exchanges and any other securities markets. The Commission may. after the commencement of this Act. promoting and regulating self-regulatory organizations including securities industry and related organizations such as Stock Exchanges and associations of mutual funds. m. e. investment advisers and such other intermediaries who may be associated with the securities markets in any manner. 3. considering and suggesting reforms of the law relating to companies and bodies corporate. but not limited to. promoting investors’ education and training of intermediaries of securities markets. regulating the issue of securities. underwriters. j. securities markets. 1980 (XXXI of 1980) and under any other law for the time being in force under which any function or power has been conferred on the Authority including. bankers to an issue. including any powers of the Federal Government delegated to the Authority. 1969 (XVII of 1969). registrars to an issue. The Commission shall be responsible for the performance of the following functions: a. encouraging the organized development of the capital market and the corporate sector in Pakistan. be delegated to it by the Federal Government and exercising any power or performing any functions conferred on it by or under any other law for the time being in force. performing such functions and exercising such powers of the Authority. o. n. prohibiting fraudulent and unfair trade practices relating to securities markets. h. performing such functions and exercising such powers (other than the power to make any rules or regulations) under the Ordinance or any other law for the time being in force as may. registering and regulating the working of stock brokers. regulating substantial acquisition of shares and the merger and take-over of companies.Powers & Functions of SECP: 1. d. The Commission shall have all such powers as may be necessary to perform its duties and functions under this Act. k. (other than the power to make any rules or regulations) under the provisions of the Ordinance. share transfer agents. rules and regulations of companies and bodies corporate. organize itself into divisions.
proposing regulations in respect of all or any of the aforesaid matters for the consideration and approval of the Board[. in each case. d. to maintain facilities and improve the performance of companies and of securities markets. process. mortgagees and potential policy holders. all bodies corporate incorporated outside Pakistan which or persons who intend to issue or offer for sale. and c. and the information referred to in clause (e) are available as soon as possible for access by the public. and] r. In performing its functions and exercising its powers. the Law of Insurance. and store. iv. and other terms and conditions of contracts of insurance. insurance surveyors and insurance intermediaries of all laws. all bodies corporate incorporated outside Pakistan which are already listed on a Stock Exchange. e. to ensure that the documents. the Ordinance or any other law. including assignment of insurance policies. in the interest of commercial certainty. v. exercising all powers. iii.] 5. and the information given to. and efficiency and development of the economy. efficiently and quickly. to promote the establishment and development of professional and educational organizations connected with insurance business with a view to improving the quality of insurance services in the country. the documents lodged with. to receive. to promote efficiency in the conduct of insurance business. regulating professional organizations connected with the insurance business. the Commission shall strivea. rules and regulations pertaining to insurance for the time being in force. c. for the listing of and quotation for any additional securities 6. [Omitted] i. to achieve uniformity in how it performs those functions and exercise those powers. ensuring and monitoring compliance by insurers. insurable interest. f. securities to the public in Pakistan or to list such securities on a Stock Exchange. reducing business costs. to administer laws effectively but with a minimum of procedural requirements. s. b. discharging all duties and performing all functions assigned to the Commission under. the approval of the Commission shall be required bya. to promote awareness among consumers with respect to the benefits of insurance and the existence of measures to safeguard the interests of mortgagers. ii. surrender value of policies of life insurance. whether directly or through an intermediary. and generally administering. all public companies incorporated in Pakistan which intend to issue or offer for sale securities in markets outside Pakistan or to list such securities on a Stock Exchange outside Pakistan. nomination by policy holders. to maintain the confidence of investors in the securities markets by ensuring adequate protection for such investors. t. and] . to maintain the confidence of holders of insurance policies by protecting the interests of policy holders and beneficiaries of insurance policies in all matters. and u. encouraging the organized development of the insurance market in Pakistan.q. to improve existing methods and devise new options for the expeditious settlement of claims and disputes between insurers and policy holders and between insurers and intermediaries. Without prejudice to the provisions of sub-section (4). it under this Act. b.
eServices has been launched by the SECP in Sep. promote confidence and strengthen the country’s economy. Incorporation of companies has been made much easier. and the Commissioner or officer to whom any of the functions or powers have been delegated under section 10 may. Online services save time and resources. are rendered within one day. any books. The Commission. in order to enforce and give effect to the Act[. require anyonea. . to take whatever action it can take. for the purposes of a proceeding or enquiry. smooth and swift ensuring completion of this process within three days. to produce before. increase efficiency. create a paperless environment. It enables the promoters and management of the company to interact online using the eServices portal. providing of certified copies etc. being documents relating to any matter the examination of which may be considered necessary by the Commission or such Commissioner or officer. the Law of Insurance]or any other law. without visiting the SECP offices. online incorporation of companies and e-filing of statutory returns.g. a number of operational changes have been introduced and a friendly environment has been created at the CROs. the Ordinance. an officer of the Commission specified in this behalf. and is necessary. accounts or other documents in the custody or under the control of the person so required. and to allow to be examined and kept by.. and b. Other public services like availability of name. to furnish to an officer of the Commission specified in this behalf such information and documents in his possession relating to any matter as may be necessary for the purposes of the proceeding or enquiry. which facilitates online availability of name. 2008. 7. Since the inception of SECP.
settled trades.507 points at the end of the year 2000 . an inefficient. mitigate macroeconomic risks stemming from capital flows and develop a well balanced and vibrant capital markets. efficiency of investment and ultimately its rate of economic growth. (b) further deepen and diversify capital markets. these opportunities will augur well for emerging markets in general. We now see a fresh horizon of new possibilities where major developments on the pattern of the world's most developed capital markets have already been implemented. the equity capital market in Pakistan has demonstrated a positive and steady growth. there has been a tremendous increase in market capitalization with a soaring that stood at 1. for the last two years. there is need to adhere to (a) prudent macroeconomic policies. liberalization and advances in information and communications technology. Globalization. retarded financial intermediation. sound monetary policy of the SBP.7percent over June 2005. foreign portfolio investment in capital market has substantially increased from Rs 76. respectively in FY07 and the Karachi Stock Market has sustained its position as one of the best performing markets around the world. It effectively starved the private sector of much needed capital. Average daily turnover of 294 million shares is remarkable. when our capital markets faced a number of critical issues. including among others a weak and outdated regulatory framework. This situation slowed the development of capital market. a poorly regulated and publicly owned mutual funds industry and a nascent insurance industry that contributed little to capital market development. If we recall the Pakistan’s capital markets scenario in 90s. non-transparent and stagnant stock market. Over the last few years. market capitalization is equivalent to about 44. a successful privatization process attracting foreign investors. 3. which makes KSE one of the most liquid markets. Moreover. 2005 to Rs 97.The Role of SECP in Regulating the Capital Markets in Pakistan: Capital market plays a crucial role to mobilize domestic resources and channel them efficiently to productive uses thus raising productivity. is to pursue and sustain market confidence. which used to be around 1% percent a few years back. It has resulted in intensified competition and increased investor confidence that stimulated investment and has led to a phenomenal growth in market activity. The prerequisite for Pakistan to fully exploit the global opportunities i. 2008.The improved performance of the stock market can mainly be attributed to consistent and transparent economic policies resulting in strong economic growth. our financial markets operated in an inappropriate interest rate regime that attracted personal and institutional savings into the National Saving Schemes which offered higher interest rates not commensurate with the risks.1 percent and 48. As you must know. have tremendous breadth and vibrancy. hampered the growth of the corporate debt market. SECP. are now over 15%.027 billion (US$ 50.45 billion). Almost we all are fascinated and amazed by the changes in the global capital markets landscape that indeed. In that era.e. I think if effectively exploited. 2008 registering a growth of 64. The level of capital market is thus.6 billion as on December 31. It is indeed.has crossed the level of 12. an important determinant of a country's level of savings. all combined to present an unprecedented scope of opportunity and challenge to both providers and users of capital.3 percent. noteworthy that at current levels.23rd. to attract and maximize capital flows. maintenance of fiscal discipline and the capital market reforms including development measures introduced and adopted by the stock exchanges with full support and guidance of the apex regulator. The Karachi Stock Exchange (KSE) share index and aggregate market Capitalization (AMC) recorded an increase of 41. In addition.5 billion on September.3percent of estimated GDP of FY06. Besides political stability. Market capitalization has reached Rs. and for Pakistan in particular.274 points on April 17. and (c) to reinvigorate structural reforms that foster productivity gain ..
NBFIs and to the significant components of capital markets such as Stock Exchanges. identifying the unfair capital market practices are some examples. All public companies incorporated in Pakistan which intend to issue or offer for sale securities in markets outside Pakistan or to list such securities on a Stock Exchange outside Pakistan. including unit trust schemes. Commodity exchange. the approval of the Commission shall be required by. beside the vast and growing corporate sector. provided the clear guidelines. SECP also gather the information about the reasons of the fluctuations in the markets. The SECP also register and regulate the working of stock brokers. the SECP enables itself to recognize various changes and problems which may occur. The mandate entrusted upon the Commission has made SECP the catalyst to evolve the capital markets of the country as progressive. Monitoring the Capital Markets SECP also monitor the capital markets working in Pakistan. For example.The Securities and Exchange Commission of Pakistan (SEC) is an autonomous statutory body that is entrusted with the integrated administration and regulation of the capital markets. For regulating the issue of the securities. CDC. detect the flaws in the policies. The SECP not only regulate the business of Stock Exchanges but also regulate the business of other securities markets. therefore. As the regulator of an emerging market the SECP’s regulatory philosophy is based on the principle of developmental regulation. transparent and efficient markets. share transfer agents. Regulating the business in Stock Exchange and Other securities markets. 2. employing best practices and safeguarding the interests of the investors at large. underwriters. securities to the public in Pakistan or to list such securities on a Stock Exchange. SECP also propose regulations for the registration and regulating the working of collective investment schemes. bankers to an issue. According to the Section (20)5 of the SECP Act. investment advisors and such other intermediaries who may be associated with the securities markets in any manner. portfolio managers. whether directly or through an intermediary. The Securities and Exchange Commission of Pakistan is the regulatory authority in Pakistan and responsible for making the various rules regarding the Capital Markets. corporate sector and financial (non-banking) sectors in Pakistan. The field is really vast and challenging. the SECP is now specially promoting the insurance sector and formulating the various rules to protect the policy holders. laid considerable emphasis on market development while administering and enforcing various corporate and securities laws. SECP’s regulatory ambit extends to the Insurance sector. sub-brokers. SECP. Through monitoring the capital markets. 1997. trustees of trust deeds. the SECP Act. The Policy making for each of these areas also falls under SECP’s purview that entails not only the revision of existing laws and regulations to bring them in line with best practices but also the promulgation of new laws etc. registrars to an issue. 3. for the listing of and quotation for any additional securities. All bodies corporate incorporated outside Pakistan which or persons who intend to issue or offer for sale. in each case. By monitoring the markets. 1997. NCCPL. . Regulating the issue of Securities. SECP’s regulations are based on: Consultative rule making Facilitating implementation Stringent enforcement 1. All bodies corporate incorporated outside the Pakistan which is already listed on a Stock Exchange.
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