Appellate Bench''s ruling: new rules empower SECP to grant or refuse licence to brokers

The Appellate Bench of the Securities and Exchange Commission of Pakistan (SECP) has observed that the Securities Brokers (Licensing and Operations) Regulations, 2016 (the Regulations) empower the SECP to grant or refuse the license to a brokers and its powers have been delegated to the Commissioner (Securities Market Division).
According to an order issued by the SECP Appellate Bench here on Friday, the Appellate Bench (the Bench) has noted an anomaly during the proceedings of the case conducted by the respondent (SECP Commissioner Securities Market Division). The regulation No 10 of the Regulations empowers the Securities and Exchange Commission of Pakistan (the Commission) to grant or refuse the license to a broker. The Commission has delegated its powers to the (SECP Commissioner Securities Market Division) vide SRO 123(1)/2017 dated February 27, 2017 (the SRO). As per the SRO, the SECP Commissioner Securities Market Division was the only competent person to issue a show cause notice and conclude the proceedings through formal adjudication.
The order shall dispose of Appeal No 11 of 2018, filed against the order dated 11/12/17 (the impugned order) passed by the Commissioner SMD-SECP (the respondent) under the Securities Brokers (Licensing and Operations) Regulations, 2016 (the Regulations) read with the Securities Act, 2015 (the Act) whereby, company (the Appellant) application for renewal of licence/registration as broker (the Application) was refused.
The proceedings against the appellant were initiated through a notice dated March 31, 2017 (the notice) issued by Faisal Nawaz, Joint Director (JD). Thereafter, the JD also issued a hearing notice dated July 19, 2017 in furtherance to the notice and advised the appellant to attend hearing before the respondent on July 31, 2017.
The Appellate Bench (the bench) has noted an anomaly during the proceedings of the case conducted by the respondent. The regulation No 10 of the Regulations empowers the Securities and Exchange Commission of Pakistan (the Commission) to grant or refuse the licence to a broker. The Commission has delegated its powers to the Respondent vide SRO 123(1)/2017 dated February 27, 2017 (the SRO). As per the SRO, the respondent was the only competent person to issue a show cause notice and conclude the proceedings through formal adjudication.
The respondent has claimed that the notice is not a show cause notice, however, the bench has perused the contents of the notice and decided to treat it as a show cause notice, a condition precedent to passing the impugned order. Therefore, instead of the JD it should have been issued by respondent, who had the delegated jurisdiction and authority of the Commission to adjudicate the matter. The JD was not competent to issue notice or show cause notice therefore, the bench is of the view that issuance of notice by the JD had made the whole proceedings and the impugned order void ab initio.
Therefore, without going into the merits of the case bench hereby set aside the impugned order and direct the (SECP Commissioner Securities Market Division) to provide another opportunity to the appellant with a reasonable time (not more than three months) to remove the non-compliances hindering licensing/ registration as broker. During the course of hearing, the appellant''s representative has requested to appoint a focal person to address the licensing issues of the brokers therefore, as per information provided by the respondents'' representatives. In this regard, the appellant may contact Executive Director Muhammad Asif Jalal Bhatti for resolution of queries, the SECP Appellate Bench added.