All Members of the Policy Board of the Securities and Exchange Commission of Pakistan (SECP) must carry out their work in an environment that is free from any suggestion of improper influence and take all reasonable steps to avoid being in an actual, apparent or potential conflict of interest. The SECP here on Thursday issued S R O 1223(I)/2015 to lay down Code of Conduct for the members of the policy board.
The SECP said that as an integrated regulator of Pakistan's capital markets, corporate, NBFC and Insurance Sector, fiduciary trust and respect, is the cornerstone of relationship between the SECP and investors, market participants, other regulators, and the government.
Members of the Policy Board of the SECP (the Members) remain committed to the highest standards of honesty and integrity in all their activities ensuring their exemplary conduct. Their actions shall always reflect SECP's values, and promote a working environment that upholds and demonstrates their commitment to these core values.
This Code of Conduct (Code) is a statement of values and principles that will guide the Members in their day-to-day activities. Their continued commitment and uncompromising adherence to this "Code of Conduct" is core to the effectiveness of the SECP as the regulator, ensuring its continued growth as a dependable, trusted and respected organisation.
This Code is framed in terms of the requirements as stipulated under section 9 of the Securities and Exchange Policy Board (Conduct of Business) Regulations, 2000. The SECP said the Code shall apply to all persons holding the position of Member of the Policy Board. All Members are expected to be aware of, and comply with, this Code. Any enquiries about the Code or reports of possible breaches of this Code by a Member should be made to the Chairman of the Policy Board. The Members shall subscribe to the Code and complete the declaration in Appendix A of the said SRO.
A conflict of interest arises when a Member has an interest, pecuniary or otherwise, which can be regarded as a conflict of interest between his duty to perform his functions under the SECP, Act 1997 and such interest which could impair his ability to consider and decide any question impartially or create bias in his advice as laid down in Part IV of the SECP Act, 1997. Conflicts of interest may arise in various ways, for example, as the result of a direct or indirect financial interest, including an interest held by a commercial undertaking; a personal association or relationship with those affected, or likely to be affected, by any decision or advice; an expectation of a future interest; a previous association with a matter, or an interest with a common interest group, such as a public or private entity; enmity or personal bias and any other instance that can prejudice the ability of a Member to discharge his duty under the SECP Act, 1997.
All Members must take steps to ensure that any conflict of interest to which they may be subject to, does not affect, or reasonably appear to affect, a decision taken by the SECP. It is the responsibility of each Member to disclose potential or actual conflicts of interest with respect to his duties at SECP, as soon as they arise or he becomes aware of them, SECP said.
No Member shall exploit, or reasonably appear to exploit, to his personal advantage any personal or professional relationships with any regulated entity or any organisation with which the SECP may have contractual or business relationship, or an officer or employee of such organisations.
No Member shall directly or indirectly involve in litigation against SECP or has history of his / her involvement in such litigation. The SECP said no Member shall participate in making any decisions at the SECP if he could benefit from the decision. If a Member is member of a regulated entity or group he may not, during the course of his appointment as Member of the Policy Board, participate in, or attempt to influence, any decision-making of that body or group if he could benefit from the decision or as a result of the decision, the interests of a regulated entity or group could conflict with the interests of the SECP.
Members, by virtue of their position as Policy Board Members, shall not accept the services of a SECP's regulated entity on terms that are known to be more favourable than the regulated entity normally offers. During the course of appointment with the SECP, the Members must not give preferential treatment or the appearance that any preferential treatment is being provided to any person or entity or any former employee, Commissioner or Member at the SECP.
The Members may not influence a contract on behalf of the SECP with a member of their family or a person or entity that the Member or a member of his family has a significant relationship with or a substantial interest in directly or indirectly the hiring of a member of their family.
The Members may not engage in a business or undertaking, outside their appointment with the SECP if the private interest in such undertaking could conflict with their role at the SECP or the Member's role at the undertaking would interfere his ability to perform at the SECP.
The Members must not exercise their authority in a matter if they have a personal or pecuniary interest relating to the matter that is, or could reasonably be perceived to, conflict with the Member's ability to exercise an unbiased judgement; believe that they would be unable to render an impartial decision or have continuing or prior associations or relationships, including family and other close personal relationships, that would reasonably be perceived as preventing the Member from rendering an impartial decision.
The Members shall not lobby any Member, Commissioner or employee of the SECP for, or on behalf of, a SECP's regulated entity. The SECP said Members shall not use any information acquired in performance or exercise of their functions either directly or indirectly, make record of or disclose confidential information to any person or entity, unless they have been authorised to do so by law. The Members understand that violation of sub section (1) of section 35 of the SECP Act, 1997 is an offence under sub section (2) of section 35 of the SECP Act, 1997 and attracts penalty provided therein.
The Members may not seek preferential treatment by, or privileged access to, Commissioners, Members or employees of the SECP. According to the SRO, the Members shall not lobby any Member, Commissioner or employee of the SECP for, or on behalf of, a SECP's regulated entity. The disclosures made under this section of the Code will be kept confidential and will not be disclosed except where there is a requirement for disclosure for the purpose of managing potential or actual conflicts any legal or regulatory obligation to disclose the information.
The Chairman of the Policy Board shall have the authority to decide the matter of conflicts of interest of any Member. Failure to disclose any conflict of interest is liable to disqualification as Member in terms of section 18 of the SECP Act, 1997. The Members by virtue of their position with SEEP have access to confidential information and are responsible to safeguard the confidentiality of such information that is in their possession or to which they have access to. The Members must not use confidential information to directly or indirectly benefit themselves or anyone else or in a business or for other activities outside their appointment with SECP.
The Members must not disclose confidential information outside the SECP unless authorised to do so by law or the SEEP. Confidential information may be disclosed to others at the SEEP only when it is required in performance of official duties or by law. The Members must avoid discussion of a matter with any person outside the SECP while that matter is pending.
The Members must not be swayed by partisan demands, or considerations of personal popularity or notoriety; and perform the functions above fear of unjust criticism by person, party or group. The Members must strive to ensure, protect, maintain and promote the independence of the SEEP at all times.
Appointment to the office of SEEP's Board Member is a high honour and requires that a Member's conduct not only in the performance of the duties of this office but also in the everyday life should be beyond reproach. The Members must act in an honest and ethical manner when dealing with each other, business stakeholders and other third parties, to promote trust and confidence. The Members must recognise their obligation to preserve the sanctity of the laws administered by SECP and for this purpose pursue and prosecute, vigorously and diligently all matters which they oversee, SECP added.
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