Khalid Mirza asks management to enforce board decisions

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) Policy Board has directed the Commission that Listed Companies (Buy Back of Shares) Regulations recently approved by the Board should be revised and restriction of period of buy-back after capital issue be reduced to six months from earlier three years.

The SECP’s Policy Board that met here with Professor Khalid Mirza in the chair gave these directions. However, the Board expressed concern over the SECP’s not implementing its earlier decisions regarding substantial reduction of regulatory fees charged to the asset management companies, withdrawal of cases and officers from National Accountability Bureau (NAB) and renewal of brokers’ licences.

The Board noted that it was a matter of regret that the policy directions of the Board aimed at facilitating business and reducing the cost of doing business had not been implemented. The Board noted, “The Commission has, yet again, flouted the orders of the Board and is averse to ensuring compliance of the directions.”

Mirza expressed dissatisfaction and directed the management to ensure that all decisions passed by the Board be implemented unconditionally and expeditiously. The Board rejected the SECP 2019-20 annual budget and noted that the reduction in regulatory fees, that it had ordered, had not been incorporated and still constitute the anticipated revenue of the Commission.

The Board is of the view that a reduction in fees is essential for growth and development of various segments of the capital market and that volumes have to be increased which, in turn, will produce revenue for the regulator.

The management did not share views of the Board and held that the regulator would be reduced to a financially dependent and ineffective one. In response, several Board members observed that 20 percent cut in staff, as already directed by the Board, pruning of excessive expense allocations and elimination of certain major or uncalled capital expenditures (which the Board had already unequivocally stated that it would not approve) shall more than adequately compensate for the decline in revenue caused by the Board’s direction of fee reductions.

The Board has directed the management to revise the proposed annual budget and submit it in its next meeting to be held on July 1, 2019.

The Board also reviewed the process of appointment of nominees on the boards of the Pakistan Stock Exchange Limited (PSX), Central Depository Company Limited (CDC) and National Clearing Company Limited (NCCL) and directed that the process should be revisited and a pragmatic criteria and process for such appointments be formulated and submitted for the Board’s approval.