October 26, 2002	Saturday	Sha’aban 19,1423

ISLAMABAD, Oct 25: The chairman, Securities and Exchange Commission of Pakistan (SECP), Khalid A. Mirza has expressed his confidence that the future government would let the capital market regulator continue as an independent body in the interests of economic development.

Talking to journalists here on Friday, he said he was sure that the future government would be aware of the importance of strengthening the investors’ confidence in the integrity of the market. Such a confidence was inconceivable without the rule-based framework created by the SECP.

Reviewing broadly the prevailing situation, the SECP Chairman observed that the SECP had enforced a code of corporate governance and an integrated regulatory dispensation for entire NBFI sector.

To a question about future agenda of SECP, he said, the Commission was going to issue guidelines for commercial paper, phase out the Badla system and replace it with margin financing and futures contracts.

SECP, he said, had also taken numerous measures to develop the non-bank financial sector—hedging, futures, mutual funds, asset management, etc. It was the absence of this buttress which played havoc with the economies of southeast Asia during 1997 crisis in which their banking sector collapsed. By contrast, the economies such as Hong Kong survived that crisis because they had a mature NBFI sector, he argued.

Asked whether he thought the independence of SECP could be guaranteed through some legislation, he said the SECP Act provided all such guarantees and, as the past experience showed, all that was needed was the cognizance by the government of the fact that capital market and its multifarious instruments could play a positive role in the economy only if there existed a regulator as an impartial referee.

A journalist recalled that it were the political governments of PPP and PML(N) who had set the ball rolling by promulgating the SECP Act that culminated in establishment of SECP. This is sufficient proof of their realization of the need of such a sound system.

Their policy in this regard had stemmed from their desire to provide an alternative channel in the shape of stock market where people might confidently invest their savings and expect adequate return within the parameters of Islam’s ban on interest.

It was the bureaucracy that posed the most serious threat to the independence of SECP as a professional body free of their control, the journalist opined. Ultimately, the capital market itself was at risk owing to its machinations.

After three years, SECP Chairman observed in his response, the market had demonstrated its resilience with the KSE index having crossed the 2100 mark, while its counterparts almost everywhere were subject to wide fluctuations.

The market had generally stayed on its course even in the post- October 12 scenario when uncertainty was at its peak about the next government. At all times and in all other places, the markets have plummeted in this kind of situation. But not the stock market of Pakistan, the SECP Chairman pointed out.

While a handful of players who took undue advantage of defective regulation were holding their breath for a change of government and consequential flagging of commitment to an SECP devoted to making transparency, accountability and fairplay the cornerstones of capital market, majority of them felt unprecedentedly secure and satisfied with a rule-based system.

He was, therefore, sanguine about the bright future of the stock market and the sagacity of the political leadership not to roll back the achievements of the past several years at a time when these are about to yield their fruit.

In this regard, Mirza referred to a newspaper report according to which the prospective investors in UAE were eagerly eying Pakistan as the destination of their investment.