With the introduction of the code of corporate governance in 2012 applied to all listed companies as a part of stock exchange regulations. This code also incorporated international best practices and standards to ensure transparency and good governance.
Moreover, SECP has also in the past made similar moves to bring investor confidence back, especially by setting up a centralized clearing company in the form of National Clearing Company of Pakistan Limited (NCCPL). NCCPL's introduction in to the market replaced the separate and individual Clearing Houses of three stock exchanges by a single and centralized entity. NCCPL introduced the National Clearing and Settlements System (NCSS), an electronic clearing and settlement system, which ended the requirement of 3 separate clearing houses in the country and provided relief on time involved for clearing trades between parties.
Since its inception, NCCPL has not only grown as a clearing and settlement service organisation in terms of its capacity and capability, but has also started making valuable additions in its products and services portfolio to facilitate the capital market investors and contribute towards development and transparency of capital market operations.
NCCPL's latest offering to the public, the National Custodial Services (NCS), is another product which looks to build investors' confidence and increase investor participation in capital market activities.
Similarly with the introduction of NCS, by NCCPL, it takes away one liability of investing in the stock markets and lets the investor only worry about the natural course of events. The capital market investors opting to avail the NCS can continue to transact in the capital markets through their respective TREC Holders. Further, custody of cash and securities will also be maintained with NCCPL.
"NCS is one of the key institutional products introduced in the capital market that shall significantly reduce market risk, add transparency, and enhance transactional efficiency", said Nadeem Naqvi, MD KSE and Chairman NCCPL Board. "The TREC holders should be welcoming this development as it increases the credibility of the capital market as whole. NCS provides investors the option to have national capital market institutions look after their assets if they so wish and this should go a long way to avoid the issues related to the custody of their assets. The reignited fears around investing should be put to bed and potential investors should look towards the stock exchange to invest money in instead of just properties."
Speaking about NCCPL's latest offering, Muhammad Lukman, CEO NCCPL said: "The NCS is an effort made by NCCPL to add to the effectiveness of the capital market operations. It offers safe custody of investors' cash and securities in a cost effective manner and facilitates the TREC Holders by providing relief in margin and capital adequacy requirements." Further talking about overseas Pakistanis, he added, "Through this product we are also targeting overseas Pakistanis, who are not investing money back home in the capital market.
A campaign will soon be launched to create awareness amongst non-resident Pakistanis about this."
Change over the years and recognizable improvements in the Pakistani capital markets was due to the implementation of stringent reform, revolutionary strategic legal and structural changes and efficient transparency and security offered to its investors. The attempt to improve the capital structure was fruitful with the results reflected in 2014 and the consecutive third position for three years running as the top ten best performing markets in the world.
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