KARACHI: Pakistan’s central bank on Friday released a revised set of regulations for exchange businesses, describing corporate governance structures, establishing criteria for information technology systems and internal controls, and strengthening the supervisory and enforcement regime.
“The State Bank of Pakistan (SBP) has undertaken a comprehensive review of the existing regulatory instructions. Accordingly, a consolidated and updated ‘Regulatory Framework for Exchange Companies (RFEC)’ has been developed,” it said in a circular.
The framework will replace the existing Exchange Companies Manual and will become effective from January 01, 2025. In order to ensure full compliance with the framework, the exchange companies (ECs) will formulate and align their policies, procedures and systems by June 30, 2025, it added.
According to the framework, the exchange company’s minimum paid-up capital will be one billion rupees. The shortfall must be filled by a capital-deficient company by the following deadlines: Rs600 million by December 31, 2025; Rs800 million by December 31, 2026; and Rs1 billion by December 31, 2027.
According to the framework, the chief executive officer of the exchange company is any individual who, under the direction and control of the board, is given full or nearly full authority to manage the exchange company’s affairs. Any person holding a director position on the board of an exchange company is considered a director, as are sponsor directors, nominees and substitute directors, among other titles that SBP will periodically examine.
Any business that wants to operate as an exchange company and receive authorisation under the Foreign Exchange Regulation Act can do so by contacting the SBP. There would be three steps in the approval process: a) certificate of no objection for the establishment of a company; b) approval in principle for the operationalisation of a firm; and c) the granting of an authorisation to start operations.