The Securities and Exchange Policy Board has directed the Securities and Exchange Commission of Pakistan (SECP) to do away with the practice of licence renewal fee for stock market intermediaries, brokers, consultants to the issue, underwriters registered with the Pakistan Stock Exchange (PSX), leasing companies, investment banks, insurance companies and mutual funds.
The SECP Policy Board met Wednesday at the SECP head office under the chairmanship of Professor Khalid Mirza.
On the recommendation of its Regulations Committee, the Policy Board has directed the Commission to consider a substantial reduction in fees so as to remove the harsh regulatory impediments that hamper the overall growth of the financial services market to facilitate the ease of doing business in the country. The chairman said: "We must move towards beneficial regulation of the financial services. It's important to simplify and reduce the cost of doing business. What we are seeking is light regulation, low-cost and tough as well as fair enforcement," Khalid Mirza added.
According to sources, the renewal fee of non-banking finance companies (NBFCs) is done after every three years. Stock market intermediaries have to pay annual renewal fee for renewal of their licences. This is very harsh for the NBFCs and stock market intermediaries to regularly seek renewal of their licences every year or after three years period, where applicable. Such measures are discouraging investments and creation of new companies. If any company is engaged in wrongdoing, show cause notice be issued or inquiry be conducted for cancellation of licenses, but charging annual renewal fee is unfair for the corporate sector, particularly NBFCs.
The SECP Policy Board is very much concerned about the fact that the people are leaving businesses due to high fees and tight regulations of the corporate sector. "We have started serious review of each and every regulation of the SECP." Sources said that the Policy Board has further directed the SECP if the Commission finds any legal issue or difficulty in abolishing renewal fee and renewal of licences, SECP should inform the Policy Board for necessary action. The SECP can automatically renew the annual licences of the stock market intermediaries registered with the PSX.
The chairman, Pakistan Stock Exchange (PSX) also gave a presentation to the Policy Board on the regulatory and policy issues confronting the stock market intermediaries and other operators in the market. The board agreed, in principle, to all the measures proposed by the PSX, including ceasing the practice of annual renewal of licence; reduction of 8 bps fee on every rupee under management of mutual funds, which costs funds around Rs450 million a year, to 2 bps; as well as other measures that would facilitate operations of the financial industry. The board has given directions to the Commission to this effect.
In addition to other decisions, the Policy Board also constituted an insurance committee to delve into the issues and challenges that are being posed to the industry. In the previous meeting of the Policy Board, the oversight, regulation and governance committees of the board were constituted, which also presented recommendations/suggestions of their respective areas.
The SECP Policy Board, in pursuance of Section 12 of the SECP Act 1997, comprises ex officio members of the Ministries of Finance, Commerce, and Law, SBP, SECP and persons of eminence from the private sector.