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  • SECP extends coronavirus contingency plan for corporate meetings

    SECP extends coronavirus contingency plan for corporate meetings

    ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has extended the applicability of coronavirus related contingency planning for general meetings of shareholders.

    In a notification issued on Friday, the SECP extended the applicability of its circular No. 5 of 2020 dated March 17, 2020 to annual general meetings and extra-ordinary general meetings to be held up till January 31, 2021.

    In its circular no. 5 dated March 17, 2020, the SECP issued following coronavirus contingency planning for annual general meetings of shareholders:

    In light of the threat posed by evolving COVID-19 situation (coronavirus) pandemic and to protect the wellbeing of shareholders, the SECP issued the following directives:

    i. In order to avoid large gathering at one place, the companies shall consider provision of video link facilities, webinar or other electronic means.

    ii. The companies shall also provide email, WhatsApp number, mobile number or any other electronic mean through which shareholders can provide comments/suggestions for the proposed agenda items of the AGM.

    iii. The companies shall disseminate the aforesaid details to the shareholders through its website, Pakistan Stock Exchange and addendum/notice in newspapers along with complete information necessary to enable them to access the facility. Any change in venue shall also be communicated.

    iv. It will be responsibility of the company secretary and chairman of the meeting that comments / suggestions of the shareholders should be discussed in the meeting and made part of the minutes of the meeting.

    v. Maximum participation of shareholders be ensured via electronic means and by requesting members to consolidate their attendance through proxies, while honoring quorum provisions.

    vi. The companies shall consider protective measures during the meeting i.e. provision of hand sanitizers, masks and distant seating etc.

    vii. For special business voting through postal ballot shall be considered.

    viii. With reference to Circular No. 02/2018 dated February 09, 2018 it is re-emphasized that the provision of gifts/incentive in any form to shareholders at or in connection to general meetings is strictly prohibited under Section 185 of the Act.

  • SECP recommends allowing individuals to act as securities, futures advisors

    SECP recommends allowing individuals to act as securities, futures advisors

    ISLAMABAD, July 5, 2023 – In a bid to promote the capital market and enhance financial inclusion, the Securities and Exchange Commission of Pakistan (SECP) has recommended allowing individuals to act as securities and futures advisors. This proposal aims to broaden the investor base and expand the outreach of the capital market.

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  • SECP proposes amendments to insurance laws

    SECP proposes amendments to insurance laws

    ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued draft bill to amend Insurance Ordinance 2000 with aim to bridge regulatory gaps in existing laws.

    The draft law has been placed on SECP’s website for stakeholders and public consultation.

    The draft bill will address the regulatory gaps in existing law and provide a conducive regulatory environment to encourage market development, the SECP said.

    It will facilitate use of technology, provide ease of doing business and address entity specific and systemic risks by shifting towards Risk Based Supervision (RBS) and Risk Based Capital (RBC) Regime, it added.

    The amendments in law will also strengthen the regulatory framework and ensure its alignment with the Insurance Core Principles (ICP) of the International Association of Insurance Supervisors (IAIS).

    The significant reforms proposed in the draft bill include introduction of dedicated micro-insurers, provisions for regulation of takaful and re-takaful, regulation of local and foreign reinsurance business for enhancement of local capacity, regulation of reinsurance brokers, flexibility for introduction of new intermediaries, insurance repository and insurance self-network platform, provisions for regulation of index based insurance and InsurTech.

    Provisions for introduction of RBS and RBC regime and establishment and operation of a guarantee fund for insolvency of insurers have been included to strengthen the regulatory framework and align the law with core principles of IAIS and address systemic risk.

    The amended law will also assist in enhancing compliance with AML/CFT frameworks.

    The changes include requirement of appointed actuary and product filing of personal lines for non-life insurance, appointment of internal actuary for life insurers and enhancement of market conduct provisions.

    The regulatory powers of the Commission for regulation and supervision of insurance companies and intermediaries, have also been streamlined in the draft bill.

  • NBMFCs borrowers reschedule loans worth Rs36bn: SECP

    NBMFCs borrowers reschedule loans worth Rs36bn: SECP

    ISLAMABAD: The Non-bank Microfinance Companies (NBMFCs) have reschedule loans of worth Rs36billion of total 2,244,605 individuals and micro-enterprises as of June 30, 2020, Securities and Exchange Commission of Pakistan (SECP) said on Tuesday.

    The SECP said that it had relaxed the regulatory requirements for non-bank finance sector allowing them to defer or reschedule the loan repayments of their borrowers during COVID-19 pandemic.

    Out of these, 1,379,330 borrowers were facilitated through deferment of principal repayments of Rs27.778 billion by twelve NBMFCs, while 865,275 borrowers benefited through rescheduling of loans of 7.998 billion rupees by nine NBMFCs.

    The SECP has already extended the time by three months for NBMFCs to accept deferment requests of borrowers till September 30, 2020.

    Earlier, the SECP had urged the NBMFCs to adopt a considerate approach to accommodate their borrowers who belong to unprivileged segments of the society.

    The SECP had also allowed NBMFCs to accept borrowers requests made through electronic means or phone calls. It is part of SECP’s efforts to provide relief for mitigating adverse effects of COVID-19 pandemic that has resulted in slowdown in business and livelihood activity.

  • SECP issues draft professional clearing members regulations

    SECP issues draft professional clearing members regulations

    ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued draft Professional Clearing Members (PCM) Regulations, 2020 for public consultation.

    Professional clearing members denotes the concept of a third party independent institution, which will offer custodial and clearing/ settlement services to securities brokers and their customers.

    PCM can be a financial institution, such as a commercial bank, Non-Banking Finance Company etc., or a specialized entity formed for this purpose. PCM will handle the custody and clearing/ settlement functions for brokers that will significantly reduce compliance burden, ensure efficiency in businesses and allow brokers to focus on their key competencies.

    The new regulations will evolve a new business model, which will support ease of doing business, and reduce operational costs.

    The draft PCM Regulations lay down licensing, conduct and operational requirements for PCM which include eligibility criteria, development of important policies and procedures, measures for ensuring customer asset protection and segregation, confidentiality of customer information and compliance with corporate governance requirements etc.

    Earlier, SECP had introduced the concept of categorization of securities brokers and segregation of trading and custodial/ settlement functions, whereby only those brokers which fulfill the eligibility criteria can offer custodial/ clearing services.

    As per the new model, Trading Only brokers can transfer their custody/clearing services to brokers which meet significantly higher eligibility criteria and licensed as Trading and Clearing brokers.

    PCM framework is a crucial milestone in implementing the new broker regime and introducing international best practices. It will mitigate the market risk and further strengthen the custody protection measures to safeguard interest of the investors.

    The draft PCM Regulations are available on SECP website and comments may be shared with the SECP by July 17, 2020.

  • NBMFCs allowed deferring loan repayment for one year

    NBMFCs allowed deferring loan repayment for one year

    ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has allowed non banking microfinance companies (NBMFCs) to defer loan payment of borrowers for one year.

    The SECP issued circular No. 21 of 2020 on Monday and allowed that NBMFCs may, upon a written request of a borrower received before September 30, 2020, defer repayment of principal loan amount by one year, provided that the borrower will continue to service the mark-up amount as per agreed terms and conditions.

    The SECP issued circular 09 of 2020 dated March 31, 2020 to allow three months’ extension in time to NBMFCs for accepting borrowers’ requests to defer repayment of principal loan amounts.

  • SECP extends date for AMCs to comply with investor’s suitability assessment

    SECP extends date for AMCs to comply with investor’s suitability assessment

    ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has extended date for Asset Management Companies (AMCs) to comply with mandatory requirement of providing investor’s suitability assessment.

    A statement issued on Wednesday the SEPC said that to provide mutual fund industry further relief in fulfilling regulatory compliance requirements during COVID-19 pandemic the regulator has extended the timeline for AMCs to meet investor’s suitability assessment requirements, stipulated in Circular No 2 of 2020.

    The extended timeline is July 24, 2020.

    SECP’s suitability assessment requirements require AMCs to classify the Collective Investment Schemes (CIS) and investment plans with regards to the risk of principle erosion, ranging from very low risk for money market funds to high risk for equity funds.

    AMCs are also required to ensure suitability of CIS/Plan to the investor and assess the risk profiles of investors before his/her investment in any specific product or strategy.

    Effective implementation of AMCs risk profiling mechanism will ensure that the investor makes an informed investment decision while investing in any mutual fund/plan, as per his/her risk profile.

  • NBMFCs reschedule over Rs17 billion loans of 0.93 million individuals

    NBMFCs reschedule over Rs17 billion loans of 0.93 million individuals

    ISLAMABAD: Non-bank Microfinance Companies (NBMFCs) have rescheduled over Rs17 billion loan portfolios of 932,862 individuals in order to provide relief in the wake of coronavirus outbreak.

    The Securities and Exchange Commission of Pakistan (SECP) in a statement issued on Tuesday said that its permission to NBMFCs to reschedule the loan portfolio not only helped NBFCs to adjust their portfolio at risk but also resulted in extending relief to 932,862 individuals and micro-enterprises who have borrowed over 17 billion rupees from non-bank microfinance companies (NBMFCs), as reported on May 31, 2020.

    Out of these, 796,893 borrowers were facilitated through deferment of principal repayments of over 13.1 billion rupees by six NBMFCs, while 135,969 borrowers benefited through rescheduling of loans of 3.9 billion rupees by four NBMFCs.

    On March 31, 2020, the SECP had relaxed the regulatory requirements for non-bank finance sector allowing them to defer or reschedule the loan repayments to their borrowers. It was part of SECP’s efforts to provide relief for mitigating adverse effects of COVID-19 pandemic and ensuing lockdowns.

    The SECP had also urged the NBMFCs to adopt a considerate approach to accommodate the borrowers who belong to either unprivileged or underprivileged segments of the society.

    The SECP had also allowed NBMFCs to accept borrowers requests made through electronic means or phone calls.

  • SECP proposes setting up oversight committee to review Shariah compliance

    SECP proposes setting up oversight committee to review Shariah compliance

    ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has proposed constitution of an oversight committee to review Shariah compliance of listed companies and securities.

    The SECP issued draft amendments to Shariah Governance Regulations, 2018 through SRO 510(I)/2020 dated June 03, 2020.

    An amendment has been proposed in regulation 12 to form the oversight committee.

    According to the draft amendment:

    An Oversight Committee to conduct Shariah screening process:

    1. There shall be an oversight committee comprising of the following members to oversee and establish the Shariah screening criteria.

    (a) Chairman Shariah Advisory Committee, SECP – as head

    (b) A representative of PSX;

    (c) A representative of KMI;

    (d) A representative of MUFAP.

    1. The oversight committee shall conduct the Shariah screening for listed companies on the basis of criteria notified by Pakistan Stock Exchange (PSX) as per regulation 11 for the purpose of a Shariah index.
    2. The Oversight committee shall review the Shariah compliance of companies and securities on a bi-annual basis.
    3. The oversight committee shall exclude a company or security from the index as and when it becomes Shariah non-compliant.
    4. To facilitate oversight committee and develop Islamic capital market products, PSX shall establish a dedicated Shariah department and appoint at least one independent Shariah Advisor.
  • SECP forms body to develop RBC regime for insurance sector

    SECP forms body to develop RBC regime for insurance sector

    ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has constituted a working group of actuaries for the development of Risk Based Capital (RBC) Regime in Pakistan, said a statement on Wednesday.

    The group members possess local as well as diversified international experience, it added.

    An insurance company during the normal course of operations is not only exposed to risk in relation to insurance contracts that it underwrites, but also to a variety of other risks including market risk, liquidity risk, credit risk, operational risk etc.

    Currently, compliance based Paid up Capital requirements and solvency requirements are levied on insurance companies.

    The solvency regime does take into account to some extent, liquidity risk, credit risk, market risk, insurance risk etc. in calculation of solvency through admissibility of assets test, however, it does not quantify the levels of different risks borne by the insurers and therefore does not deliberate on the adequacy of capital keeping in view the risks undertaken.

    Majority of international jurisdictions have already shifted or have commenced work to move towards RBC Regime for their insurance sector, few of these jurisdictions includes, Malaysia, China, India, Sri Lanka, Hong Kong, Turkey etc.

    The SECP believes that for RBC to be implemented, the most important part would be quantification of the different risks faced by the insurance companies including their correlation/ interconnectedness in relation to the size and complexity of an insurer.

    Introduction of RBC would provide true reflection of risks taken by insurance companies and would result in a more disciplined and financially resilient insurance sector in Pakistan.