The launch of Pakistan Stock Exchange Limited (PSX) - which will be the new integrated stock exchange of our country, is a historic occasion worth celebrating. On behalf of the Securities and Exchange Commission of Pakistan, I extend both my profound congratulations and gratitude to the entire stakeholders of the integration process. Without the support from each and every one of them, the dream of establishment of PSX could not have materialised.
The successful completion of this initiative not only reflects the genuineness of the Government's, regulators' and market participants' resolve to take our capital market forward, but is also a recognition of this markets' importance in the country's economic growth. The formation of PSX is a unique and unparalleled event in the history of our financial and capital markets. The iconic display of unity displayed during the integration process and its completion without any major hindrance or disagreement gives me hope about the capability of this nation in its determination to forge ahead with dignity and ambition.
As the apex regulator of the capital market, the SECP is committed towards creation of a fair, efficient and vibrant capital market. The SECP in co-ordination with the other stakeholders has been vigorously pursuing the corporatization and demutualization process for the stock exchanges, to bring them on par with international standards. With the promulgation of the Stock Exchanges (Corporatization, Demutualization and Integration) Act in 2012, the long awaited requirement for the exchanges in terms of their conversion into for-profit entities and segregation of commercial and regulatory functions was achieved. Presently, efforts are being made to achieve the true benefits of demutualization through fulfilment of critical objectives, particularly divestment of shareholding of the exchanges and securing strategic investment and technological partnerships. The integration is an enabling step towards achievement of the said objectives. Not only will the integration help achieve the divestment and technological advancement, but the establishment of a unified trading platform and a single well-governed stock exchange will also result in good governance, transparency, improved liquidity, best price discovery, de-fragmentation, regulatory and operational efficiencies and synergies, and economies of scale. Notably, this initiative will also lead to improved image of our markets and its increased outreach within the country and abroad.
I am glad to share with you that a lot of positive developments are happening on the capital market front, in conjunction with the surge in economic activity being witnessed by our country. Today Pakistan stands compliant with most of the best practices and international benchmarks of securities regulation. The SECP is working on a comprehensive reform agenda for the capital market, which will ensure that the objectives of integration are fully achieved and the new exchange is a well-governed and robust entity. This agenda will include improved governance and diversified shareholding of the PSX; establishment of Central Counter Party, Settlement Guarantee Fund and transfer of risk management to the clearing company; a consolidated investor protection fund for PSX; and a comprehensive new regime for market intermediaries in line with international standards. The cornerstone of this agenda is investor protection and good governance, coupled with optimal risk management and an environment conducive to market development.
I would also like to highlight that the SECP is working on instituting regulatory overhauling and improvements for the capital market, to ensure that the legal framework is comprehensive and benchmarked according to international standards. The promulgation of Securities Act, 2015 last year was a breakthrough in terms of enhancing regulatory efficiencies and strengthening enforcement powers of the regulators. Furthermore, various laws such as the draft Companies Bill, Futures Trading Bill and SECP Act are in the pipeline for ensuring improved and effective regulation of the corporate sector, futures segment and the capital market. For expeditious approval of these important laws from the Parliament, I am grateful to the support extended by the Government of Pakistan. Also, efforts are being made for promoting and invigorating the debt, derivatives and commodities futures segments to ensure that the investors are provided with diverse investment alternatives. A new Future Market law has been drafted and presented to the Parliament. This law will go a long way in developing and regulating our futures market in line with international standards and best practices. Considering the importance of Small and Medium Enterprises (SMEs) and their contribution towards the economy, we have amended the current regulatory framework to incentivize listings of SMEs on the exchange's counter and facilitate them through introduction of book-building system for better price discovery and rationalisation of various requirements applicable to SMEs.
Pakistan, as a developing country, needs a stock exchange that enjoys the confidence of domestic and foreign investors and is able to mobilise capital for economic growth. The new exchange will have to take a fresh start by projecting itself as a reliable source of investment and fund-raising, while capitalising on the strengths it has inherited from its predecessors. The investing public, issuers, market participants, regulators and the government, all have great expectations from this exchange, which require a far-sighted vision and concrete measures to turn them into reality. PSX will have to focus on marketing itself to attract new listings and increase its outreach, and devise innovative business solutions for product and market development. Further, it has to ensure that the investors are best protected and facilitated, for which confidence building measures will be required. The SECP is willing to extend all possible support to the new exchange in its endeavours!
I am hopeful that with the same spirit of unity and the fervour for achievement which we witnessed during the integration process, we will continue to work towards making PSX a success!!
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