SECP closely monitors stock market situation

Introduces reform package for capital markets and corporate sector

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) - the apex regulator of capital markets - has said that it is closely monitoring the ongoing stock market situation.

The SECP's new management in a short span of time has managed to introduce a multifaceted reform agenda for the capital markets and corporate sector through extensive efforts, it said in a statement.

To ensure better coordination and encourage the involvement of stakeholders in the market reform process, the SECP chairman held back-to-back meetings with key market participants, practitioners, heads of leading corporate and financial institutions and managements of market infrastructure institutions prior to rolling out the reform package.

According to the SECP, the reforms undertaken by the regulator are aimed at bringing stability to the market, attracting liquidity, facilitating ease of doing business, revitalising market development and restoring investor confidence without compromising on the principles of sound risk management and investor protection.

It said the brokers complying with certain conditions have now been allowed to pay interest on subordinated loans taken from their directors, sponsors or substantial shareholders.

In order to enhance trading capacity of the market participants, following amendments have been approved to the regulations covering National Clearing Company of Pakistan Limited (NCCPL).

Discontinuing the 10% additional margins being collected from brokers and the 10% additional haircuts being applied by NCCPL on margin-eligible securities.

Revision in the slabs of liquidity margins, which will now be applicable only to the large exposures of brokers, and to manage risks, credit rating has been added while implementing the revised slabs.

For brokers to efficiently utilise capital, basic deposits collected by NCCPL from the brokers trading in the Deliverable Futures Contract Market will be used towards NCCPL margin requirements.

The SECP has introduced murabaha share financing regulations. It has granted approval to leverage financing in Shariah-compliant securities.

For resolving issues related to blank selling in the Deliverable Futures Contract Market, amendments to PSX regulations have been introduced to address practical difficulties limiting trading activity by the market participants.

In order to address anomalies, encourage market development and support commercial viability of the brokerage industry, instructions have been issued to the PSX for formulating regulations relating to the minimum brokerage commission.