More certifications to be made mandatory for capital market professionals

Institute of Capital Markets to increase number of certifications offered.

KARACHI:

The Institute of Capital Markets (ICM) is going to increase the number of professional certifications it currently offers to current and aspiring employees of brokerage houses, asset management companies (AMCs) and pension funds to 10 by the end of 2013, ICM CEO Syed Javed Hassan has said. ICM currently offers stock brokers’ certification and mutual fund distributors’ certification only.

While speaking to The Express Tribune, Hassan said all jobs in capital markets – front-office staff, back-office staff, settlement staff, risk managers, clearing staff, research analysts, fund managers etc - will eventually be required to obtain ICM certifications.

According to Circular 34 of 2009 issued by the Securities and Exchange Commission of Pakistan (SECP) on October 30, 2009, all brokerage houses, AMCs and pension funds must have at least two persons, or 20% of their employees – whichever is higher – with relevant ICM certifications responsible for selling collective investment schemes or providing investment advice to clients.

“New professional entrants into the capital markets shall, however, be required to attain the relevant certification within one year from the date of employment with the broker,” the circular says.

ICM has an exclusive mandate from the SECP to develop syllabuses for all certification programmes, prepare study material and conduct examinations to ensure that only trained and certified professionals operate in the capital markets of Pakistan. A majority of capital markets around the world – including the United States, United Kingdom, India, Hong Kong, Malaysia etc – have such centralised licencing bodies.

“In every jurisdiction, the regulator requires that all staff at brokerage houses and mutual funds must be certified. We want to take that certification requirement to 100% gradually in the next two years. The idea is to make it mandatory,” he explained.

Hassan says that while all mutual funds are effectively meeting mandatory ICM certification requirements, its implementation in brokerage houses is considerably weak. “Although the SECP has made it mandatory, some brokerage houses are still not meeting the requirement,” Hassan noted.

But brokers have a point. While talking to The Express Tribune, AKD Securities CEO Farid Alam complained that the syllabuses of ICM certifications are as intensive as a full-fledged MBA programme. “Asking experienced professionals who are out of touch with academics for maybe 10 years to take these tests seems a bit unfair to me,” Alam said. “ICM should consider giving experienced professionals the option of taking one orientation course only,” he added.

He said that ICM should consider exempting members of professional bodies, such as ACCA, ICAP, ICMAP and CFA from its mandatory certifications, as well as MBAs from reputable business schools. “However, I am all for making new entrants with inadequate knowledge about capital markets take these tests,” Alam added.

According to Atlas Asset Management CEO M Habibur Rahman, all professionals in the mutual fund industry are now duly certified by ICM. “In order to maintain high standards, our company policy makes it mandatory that our staff must have a certain score on the test. We ask them to retake the test even if they clear it with minimum passing marks,” he told The Express Tribune.

Rahman believes that many experienced professionals in the capital markets do not want to step outside their comfort zone, which makes them reluctant to take the ICM exams. “Education scares us away,” he candidly observed.

Hassan says around 100 professionals register every quarter for ICM exams, which do not have any prerequisite as such. Most candidates belong to the mutual funds industry, with good qualifications and relevant work experience. “For now, we’ve hardly had any candidates who are not already capital markets professionals,” he said. In contrast, up to three-fourths of the candidates seeking mandatory certifications in developed economies like the US are those who have little practical experience.

“I urge all retail investors to ask salespersons or traders at AMCs or brokerage houses whether he or she is ICM certified. This is important, because an ICM-certified professional is far more knowledgeable than a non-certified professional,” Hassan claims.

Published in The Express Tribune, February 2^nd, 2013.

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