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Tuesday March 19, 2024

Senate committee opposes extension in brokers’ monopoly

ISLAMABAD: The government on Tuesday proposed two year extension on maintaining monopoly of existing influential brokers in stock markets, reversing capital market reforms that aimed at increasing more and new players to enter into market for ensuring competitive environment. The Senate Standing Committee on Finance and Revenue headed by Senator

By our correspondents
July 29, 2015
ISLAMABAD: The government on Tuesday proposed two year extension on maintaining monopoly of existing influential brokers in stock markets, reversing capital market reforms that aimed at increasing more and new players to enter into market for ensuring competitive environment.
The Senate Standing Committee on Finance and Revenue headed by Senator Saleem Mandviwalla here at the Parliament House on Tuesday deferred the decision of granting approval to stock exchanges (corporatisation, demutualisation and integration) amendment bill 2015 and directed the authorities concerned to come up with vetted draft of proposed amendments in the bill.
However, Secretary Finance Dr Waqar Masood extended full support in order to convince the committee to pass the bill as proposed by the government in its existing shape but there were couple of occasions when the regulator, Security and Exchange Commission of Pakistan (SECP) and Finance Ministry presented different interpretations of the proposed amendments such as the SECP took stance that they would not have any objection if the protection period was extended by one year instead of two years till 2017 but the Secretary Finance was of the view that the proposed amendments were inconsistent with the agreement arrived at by the regulator with the stock exchanges and these amendments would not protect interest of any players
But the committee members were not satisfied with the arguments extended by Finance Ministry and SECP officials during the meeting and decided to defer its approval till getting the vetted draft from Ministry of Law.
This whole issue came on the surface when the SECP official accepted before the committee that due to “drafting error” instead of writing “three and half years after the enactment of law”, the June 30, 2010 deadline was written in the Act.
For obtaining the brokers’ support for the 2012 law the SECP had entered into an agreement with them which had given protection in the 2012 law, new Trading Right Entitlement (TRE) certificates could not be issued for three and half years after the enactment of Corporatization, demutualization and integration of stock exchanges Act of 2012.
This deadline would be now expired in December 2015. Now the amendment proposed to extend this protection for another two years till 2017.Sanetor Taleh Mahmmod of JUI (F) opposed this bill saying that why the government was protecting certain people. He said that there should be no extension in this period.
However, the Secretary Finance made all out effort to convince the committee that two more years should be given for issuance of new TRE certificate, which would effectively mean that until end of 2017 no new broker would be able to enter in the market.“There is a mala fide intention behind proposing the 2017 deadline”, observed Senator Talha Mehmood of JUI-F.
“There is no rationale for extending the deadline, as the extension would clearly benefit the existing brokers”, said Senator Kamil Ali Agha of the PML. The existing players were working against the interests of the small investors by making massive profits, he alleged.
Another SECP official disclosed that the SECP had originally proposed “three and half year wording and reasons best known to the Ministry of Law the wording was changed to December 2017.After hearing this whole saga, the committee directed the SECP and Ministry of Law to come up with vetted draft of the bill then they would consider it for voting purposes.