December 4, 2003	Thursday	Shawwal 9, 1424

LAHORE, Dec 3: The Securities and Exchange Commission of Pakistan has initiated a process to enter into memorandum of understanding (MoU) with its counterpart authorities in other jurisdictions (in other Saarc countries) for information sharing and cooperation.

This was stated by the SECP chairman Dr Tariq Hasan at the opening of the 6th two-day theme conference of the South Asian Federation of Exchanges (SAFE) here on Wednesday.

The conference hosted by the Lahore Stock Exchange was based on the SAFE’s study project to assess the listing regulations of the member exchanges in comparison with international and regional best practices to identify strengths, weaknesses and developmental needs.

“Such agreements and understandings would undoubtedly enhance cooperation and facilitate in achieving the SAFE objectives for mutual benefit of all member states,” the SECP chief said.

He called upon the SAFE to encourage its members to sign MoUs that would allow flexibility in networking, coordination, cooperation and exchange of information.

Dr Hasan said geographical location of stock exchanges was fast losing relevance in the new marketplace because the ensuing trend demands an increased regional and global integration of capital markets.

“The forces of globalization, technology, and new forms of competition have drastically transformed the capital markets worldwide,” he said.

He said regional integration would lower prices for financial services and make markets more liquid while the returns would be higher and the risks lower.

He said regional harmonization in terms of listing regimes from a global perspective

demanded adherence to full transparency and disclosure standards.

He said deficiencies in the listing regimes for achieving greater harmonization would, however, have to be addressed.

“Though it is not possible to have same standards in regulations in all economies, some sort of equivalence could be worked out to provide wider choice to the investors. Regulatory issues would have to be taken care of before allowing cross-border flow of capital.”

The SAFE meeting is being participated in by regulators and representatives of regional stock exchanges. Only one Indian delegate, director of the Bombay Stock Exchange, could however make it to the meeting.

In his presidential address, Punjab Governor Khalid Maqbool called for making the capital markets a safe haven for smaller investors.

“By building confidence of investors in the capital markets, a large chunk of huge low cost liquidity available in the country could be attracted into stock exchanges,” he said.

He claimed that Pakistan’s economy had been revolutionized as a result of reforms brought about in the last four years. He said privatization, deregulation, and restructuring of the (economic) institutions and reformation of capital market had put the economy on a solid footing and stabilized it.

The governor said the government’s commitment to economic reforms had instilled trust and confidence among investors in the country’s economy. “The recent improvement in Pakistan’s credit rating by Standards and Poor’s is an ample proof of the sustained improvement in the growth potential of the country.”

He nevertheless admitted that the country’s financial managers had an uphill task ahead of them to attract fresh local and foreign investment for reducing rampant poverty.

The governor also expressed his concern over lack of new listings on stock exchanges, adding the businessmen should not shy away from disclosure of their operations to shareholders.

LSE chairman Naeem Khan spoke on reforms and transparency introduced by stock exchanges on their own. He also sought cooperation of the regional exchanges to boost the South Asian markets.

“The regulators of regional exchanges should also come up with a viable set of regulations that could facilitate integration of the South Asian markets,” he said.

In his message read out at the meeting, Finance Minister Shaukat Aziz said the increasing importance of cross-border operations and the consequent need for greater cross-border regulatory cooperation could not be underestimated.

“Indeed the growing emergence of financial conglomerates and the blurring of distinctions between the activities of firms in each financial sector have heightened the need for cooperative efforts to improve the effectiveness of supervisory methods and approaches of regulators,” he said.

Elaborating on the need for regional cooperation, he said advances in technology had enabled instantaneous and seamless access into diverse capital markets.

At the same time, he added, the consolidation of specialist financial institutions into financial conglomerates with cross-border presence had redefined traditional notions of market boundaries. “The consequent growth in cross-border transactions poses regulatory challenges to national regulators supervising global market players.”

Mr Aziz said regional cooperation and harmonization should be an ongoing process and that its scope needed to be broadened through execution of bilateral and multilateral arrangements between relevant regulatory agencies.

In his presentation on strengthening stock exchange listing regimes and regional harmonization, SAFE consultant Gerry Ritchie said regional capital markets could encourage investment and stimulate growth and development (in member countries).

“Besides, these broaden capital-raising opportunities for companies, compete against overseas investment markets, create a larger and more liquid market and broaden investor choice,” he said.