SECP announces amendments to Securities & Futures Advisers Regulations, 2017

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) Tuesday announced measures to develop a resilient market for Securities and Futures Advisers, facilitating ease of doing business, improving financial inclusion, and expanding the investor base.

In this regard, the commission has issued an S.R.O. 742 (I)/2023 to notify amendments to the Securities and Futures Advisers (Licensing and Operations) Regulations, 2017 on Tuesday.

The introduced amendments align the existing regulations with market developments and eliminate redundancies to facilitate ease of doing business. One of the significant facilitations provided is reduction in financial resource requirement for Securities and Futures Advisers applying for a license as a distributor to Rs500,000 in the case of a company and Rs250,000 for individuals. The requirement on sponsors of Securities & Futures Advisers to collectively hold shares of 51 percent or 25 percent shares in case of listed company has been eliminated.

In addition, scheduled banks, microfinance banks, non-bank microfinance companies, and electronic money institutions are exempted from obtaining a separate license as a distributor. The notified regulations enable the distribution of Voluntary Pension Funds offered by pension fund managers other than Asset Management Companies and allows compensation in capacity of distributor to be received from AMC’s/Pension Fund Manager barring distributor charging any advisory fees from clients related to distributions services.

For digital advisory/distribution platforms, the regulations now include requirements for compliance with data protection and cybersecurity. The amendments also introduce the need for 15 days’ prior intimation to the Commission before launching a platform and submission of information regarding existing digital platforms.

To further decrease regulatory burden, a single consolidated Affidavit is provided. Excessive documentation requirements in Annexure-B of the regulations have been removed, the Fit & Proper criterion has been rationalized and a new Annexure-C relating to contents of the Standard Distribution Agreement for distributors has been inserted.

The SECP believed regulatory amendments/reforms are essential for the long-term sustainability of the Securities and Futures Advisors sector in Pakistan. In case of a company, the Securities Adviser and/or Futures Adviser along with its financial statements and in case of an individual, the Securities Adviser and/or Futures Adviser shall submit within four months after the end of each financial year such information as specified by the Commission, the revised regulations added.