Pakistan seeks WB assistance: Capital market regulation
By Ihtasham ul Haque
ISLAMABAD, May 16: Pakistan has approached the World Bank to help the Securities and Exchange Commission of Pakistan (SECP) in effectively regulating the capital market to avoid the recurrence of recent upheavals that brought billions of rupees loss to the investors.
Informed sources told Dawn that Pakistan had sought financial and technical support of the World Bank to enhance the “capacity building of the SECP” so that it could formulate policy interventions with a view to developing the capital market on better lines and adequately protecting investors’ interests.
The bank was requested to help have “well managed financial systems and efforts to improve the rule of law” for all the stakeholders to avoid mishaps and particularly protect the interests of small investors.
The purpose is to support the government’s initiative to reinforce an enabling investment climate through the SECP. Building on ongoing measures designed to generate faith in the integrity of the capital market, primarily through better governance, improved risk management, enhanced enforcement of corporate and securities laws, and adequate disclosures in financial reporting of companies, the SECP would formulate policy interventions meant to achieve long-term growth and development of the market whilst maintaining adequate protection of investors’ interests.
The development objectives of the proposed activities are: strengthen the SECP’s abilities to better manage its own resources to be more effective in policy making; improve the commission’s capacity to support the rule of law via enhancing the capacity of professionals that work to strengthen the legal and judicial structure; strengthen SECP’s capabilities via exposure to latest international trends in regulation of capital markets, mutual funds, insurance companies, non-banking financial sector and corporate sector in general; and strengthen the skill of professional service providers.
The sources said that the formulation of appropriate regulatory policies and implementing them though suitable laws and regulation using a limited pool of skilled professionals and institutions remained a major challenge for Pakistan as it was for other emerging economies. In this behalf, the SECP being a regulator of the capital market and the corporate sector has the responsibility to develop and implement policy decisions that would lead to achieving its intended results of having the effective capital market system that serves as a catalyst to the long-term growth and one that ensures protection of interests of all stakeholders.
The World Bank will provide financial assistance to hire international consultants and experts to conduct training programme on strengthening regulatory and policy framework for NBFCs and Modarabas, insurance and pensions, supervision of financial institutions, including NBFCs and insurance. All these international consultants and experts would be engaged in accordance with the World Bank guidelines — the standard contract/term for individual consultants would be followed.
The new role and expanded mandate given to the SECP is a challenge that has to be met by ensuring the establishment of a proper legal and policy framework, strengthening of the institutional capacity and adoption of international best practices.
