KARACHI: The Securities and Exchange Commission of Pakistan (SECP) in consultation with relevant stakeholders is framing a comprehensive Capital Market Development Plan, outlining future roadmap for the capital market. “The plan will entail introduction of key structural and regulatory reforms, development of equity, derivatives, debt, commodity markets and measures for improving governance, risk management, efficiency and transparency in [the] capital market operations,” an official said. Moreover, major restructuring in the regulatory regime of the nonbanking finance corporations (NBFCs) and Modarabas is underway to ensure the growth of small and specialised financial institutions that principally focus on the SME sector. Additionally, work is in progress for creating an enabling and empowering regulatory framework for the unregulated microfinance institutions, the official said. “These two steps will lead to improvement in access to finance and employment generation,” he said. The defaulting / nonperforming listed companies would be provided with an opportunity to rectify their defaults, he said. However, those involved in willful default would be strictly dealt with in accordance with the law. The official said, "They will not be allowed to enjoy the benefits of listing while ignoring the rights of investors." The SECP has initiated a process to increase the free-float of the listed companies as per the regulatory framework and during the current year all possible measures will be taken to complete this important reform initiative. "A concerted effort will be made in collaboration with the State Bank of Pakistan (SBP) and the Ministry of Finance to remove all impediments and strengthen the relevant intermediaries like credit rating companies, debenture trustees, underwriters, etc." The process has been started with a comprehensive review of credit rating companies, which will lead to revamping of the existing intermediaries and bringing in international players with established brand names and global presence, he said. The official said the country met qualitative and quantitative criteria and Pakistan would be re-included in the MSCI Emerging Markets (EM) Index. In order to bring the initial public offering (IPO) process at par with the developed markets, revised regulations for book building had already been enforced to ensure a user-friendly and transparent model, which also provides investors with an opportunity to participate in the process electronically. Secondly, in order to attract new listings, the existing manual procedures for listings have been simplified, while the regulatory amendments were approved to change exchanges’ pre-open modalities and to curb manipulation during the pre-open session. The official said that considering the immense potential of Small and Medium Enterprises (SMEs) in capital formation and social growth, the concept of SME Board has been introduced at the stock exchanges to facilitate listings. Moreover, with a view to encourage development of Islamic capital market, the Shariah Advisory Board has also been reconstituted.
