Stakeholders meet: SECP seeks market input on provident fund rules

Roundtable discusses risk management in relation to investments in equities

ISLAMABAD:

The Securities and Exchange Commission of Pakistan (SECP) has held a consultative roundtable in an attempt to seek feedback on the Draft Employees Provident Fund (Investment in Listed Securities) Rules 2016 from market participants.

The rules are aimed at regulating the investment being made from the employees provident fund by the companies and institutions and are important to safeguard the savings of employees, says an SECP statement. A large number of stakeholders from the corporate sector, professional associations and bar associations attended the discussion, chaired by Tahir Mahmood, Commissioner Company Law Division, SECP.

Mahmood presented an overview of the SECP's regulatory regime and highlighted the importance of consultative process for development of the regulatory framework.

The Companies Ordinance 1984 prescribes the requirements for investment of the provident fund kept by the companies.

Owing to the changing market dynamics and in order to encourage provident funds to make investment in listed securities to earn better returns, the Employees Provident Fund (Investment in Listed Securities) Rules 1996 were introduced back in 1996.

With continuous innovation in the equity market and development of new products by the non-banking finance companies for better returns, the provident funds now have a better choice available in the market. As risks and returns go together, therefore, in order to protect savings of the employees of companies, the SECP has drafted new rules for the purpose.

During the consultative session, the participants discussed issues pertaining to risk management practices for investments in equity securities, low returns on bank savings and government securities, limits to be prescribed in the rules and role of trustees of the provident funds.

The SECP said it would take care of the feedback of participants while finalising the proposed rules.

Published in The Express Tribune, April 10^th, 2016.

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