Senate approves SECP (Amendment) Bill 2016
ISLAMABAD: The Senate has approved the Securities and Exchange Commission of Pakistan (Amendment) Bill, 2016, already approved by the National Assembly with further Amendments earlier in May. The Bill will facilitate better superintendence and control over capital and financial services market, corporate sector and insurance industry bringing the SECP on a par with its international counterparts in the capital markets of the world. The new law is aimed to cover all the deficiencies and shortcomings in the existing law. The SECP succeeded the Corporate Law Authority (CLA) in 1999 as a unified regulator of the capital markets and for superintendence and control of corporate entities. However, its mandate has continued to be enhanced through various amendments, such as floatation, management and regulation of modarabas (1999), insurance sector (2000), non-banking financial companies sector (2002), commodity futures market (2003), real estate investment trusts (2008), etc.
The law will meet the local and international requirements for the corporate sector regulator, including the requirements of the International Organization of Securities Commissions (IOSCO). Major deficiencies of the current law, i.e., SECP Act, 1997, include limited financial/administrative independence of the SECP, lack of provisions on Acting Chairman, power to constitute committees, task forces, etc. and increase in the membership of the SECP Policy Board. Besides, the SECP has ineffective enforcement powers to call for information, lack of process for prosecution of cases, recovery of penalty, delay in decision of court cases, ex parte stays and inadequate investigation powers. With amendments to the SECP Act, 1997, the law will, inter alia, entail provision for the appointment of Acting Chairman along with provisions stipulating the time frame i.e. 120 days from the date the post falls vacant, for the appointment of the Chairman of SECP and private sector member of SECP Policy Board. The Bill also aims to widen the scope of powers and functions of the SECP pertaining to, inter-alia, regulations and facilitating growth of Shariah-compliant financial products, heathy growth of the corporate sector and to promote good governance; to create awareness amongst investors and to provide protection to investors; ensuring development of sound regulatory framework to counter illegal and unfair practices in financial services market; to control and minimize market abuse, misconduct and financial crimes in financial services market and other sectors regulated by SECP etc.