Nominees on boards of PSXL, CDCL, NCCL: SECP asked to devise pragmatic criteria

The Securities and Exchange Policy Board has directed the Securities and Exchange Commission of Pakistan (SECP) to devise a pragmatic criteria and process for appointment of nominees on the boards of the Pakistan Stock Exchange Limited, Central Depository Company Limited and National Clearing Company Limited.
The decision has been taken during the last meeting of the Securities and Exchange Policy Board which met at the SECP Headquarters under the Chairmanship of Professor Khalid Mirza. The Policy Board reviewed the process of appointment of nominees on the boards of the Pakistan Stock Exchange Limited, Central Depository Company Limited and National Clearing Company Limited and directed that the process should be revisited; and a pragmatic criteria and process for such appointments to be formulated and submitted for the Board's approval.
Professor Khalid Mirza told Business Recorder that in Pakistan where you have a monopoly situation wherever you look at the capital market, it is important that the boards of leading institutions are manned by capable and eminent persons that can provide proper professional guidance.
He further stated that the commission is demonstrating lack of capacity and compliance with the policy directives and decisions of the board taken solely with a view to promote the capital market, Khalid Mirza added.
The Board took stock of the implementation of its decisions that the Commission was directed to implement. Some of the major directions were the substantial reduction of regulatory fees charged to the asset management companies, withdrawal of cases and officers from NAB, renewal of broker licences and other matters.
The Policy Board has noted that the Commission has, yet again, flouted the orders of the Board and is averse to ensuring compliance of the directions. The Chairman of the Board expressed his dissatisfaction and reprimanded the
Chairman, SECP, Farrukh Sabzwari (who is also a member of the Policy Board) regarding the non-implementation of the decisions. Sabzwari could not assuage the reservations of the Board and was directed to ensure that all decisions passed by the Board be implemented unconditionally and expeditiously.
The Board noted that it was a matter of regret that the policy directions of the Board aimed at facilitating business and reducing the cost of doing business had not been implemented.
The Policy Board rejected the 2019-20 Annual Budget of the Commission that was proposed for approval in the meeting. The Board noted that the reduction in regulatory fees, that it had ordered, had not been incorporated and still constitute the anticipated revenues of the Commission. The Board is of the view that a reduction in fees are essential for the growth and development of the various segments of the capital market and that volumes have to be increased which, in turn, will produce revenues for the regulator. The Chairman SECP did not share the views of the Board and held that the regulator would be reduced to a financially dependant and ineffective one. In response, several Policy Board members observed that 20% cut in staff, as already directed by the Board, pruning of NICL Building, 63 Jinnah Avenue, Islamabad excessive expense allocations and elimination of certain major or uncalled capital expenditures (which the Board had already unequivocally stated that it would not approve) shall more than adequately compensate for the decline in revenue caused by the Board's direction of fee reductions. The Board has directed the Commission to revise the proposed annual budget and submit it in its next meeting to be held on July 1, 2019.
On the request of several stakeholders, the Policy Board also directed that the Listed Companies (Buy Back of Shares) Regulations, that were approved in the last meeting of the Board, be revised to reduce the restriction of period of buy-back of shares after a capital issue, from 3 years to 6 months. The Securities and Exchange Policy Board, in pursuance of Section 12 of the Act 1997, comprises ex-officio members of the Ministries of Finance, Commerce, and Law, SBP, SECP and persons of eminence from the private sector.