In line with its efforts to strengthen the capital market and as part of subsidiary legislation under the Securities Act, 2015, the Securities and Exchange Commission of Pakistan (SECP) has drafted the Securities Exchange (Licensing and Operations) Regulations, 2016, after taking into account the requirements of the existing laws and studying best international practices. The SECP has notified the draft regulations through publication in the official gazette and also placed the same on its website at http://www.secp.gov.pk/notification/pdf/2016/SRO-Securities_Exchange_Licensing_Operations_Regulations_2016.pdf to obtain public comments. The regulations have also been disseminated to various prominent stakeholders for consultation purposes. Comments received within 15 days will be considered and evaluated.
In compliance with the requirements of the Act, the draft regulations provide for matters relating to licensing, minimum financial resources, duties and obligations, audit and accounts, appointment and conduct of directors and management, fit and proper criteria for strategic investor, anchor investors and persons holding five percent or more shares of the securities exchange, fit and proper criteria for directors and management of the securities exchange, constitution of regulatory affairs committee, and manner of outsourcing of important functions for the securities exchange.
Under the draft regulations, shareholding criteria has also been specified for strategic investor, anchor investor and eligible financial institutions desirous of investing in the securities exchange. In order to ensure protection of public interest, an existing securities exchange will be required to reconstitute its board of directors within a specified period from the date of completion of divestment of its shares, while ensuring adequate representation of independent directors on its board.
The securities exchanges are also required to enter into an agreement with an international securities exchange or IT firm for technology partnership, collaboration, transfer of technical know how and competence within a specified time period. A securities exchange will also be required to ensure data secrecy and have a documented business continuity plan, including a disaster recovery site. It will also be required to submit to the SECP a comprehensive business development plan providing therein financial projections, product development plans and market development initiatives particularly relating to promotion of listing and trading activity, expansion of market outreach, education and training of market participants etc. A biannual report showing progress achieved in respect of each target will also be required to be submitted to the SECP by a securities exchange.-PR