April 28, 2007	Saturday	Rabi-us-Sani 10, 1428

ISLAMABAD, April 27: The Securities and Exchange Commission of Pakistan (SECP) has come up with a new draft of the Securities and Exchange Act 2007, seeking more powers in emergency situations to govern the non-bank financial markets efficiently and check insider trading and market manipulation.

This is the sixth and more comprehensive draft of the Securities Act which is ready for the approval of the commission and would later be sent to the ministry of finance for onward processing and placement before the parliament.

A cursory look at the draft of the Securities and Exchange Act 2007 gives the impression that the SECP wants more powers in emergency situations.

In the public interest, and in times of emergency, the draft says that the commission may direct by notice that it can terminate or suspend trading on a securities market, confine trading to liquidation of securities positions and order liquidation of all positions or part, thereof, or reduction in such positions.

In such critical times, the commission can issue directives to limit trading to a specific price range, modifying trading days or hours and ask any person to act in a specified manner in relation to trading in securities or any class of securities. The commission has the powers to modify or suspend any of the regulations of a securities exchange and to set emergency margin levels in any securities or class of securities.

The draft states that the SECP would be entitled to take " such other action as the commission considers fit to maintain or restore fair, efficient and transparent trading in any securities or liquidation of any position in respect of securities or class of securities."

Emergency has been defined as any major market disturbance which prevents the market from accurately reflecting the forces of supply and demand or there are proofs of manipulation.

The draft Act has also given a broad and encompassing definition of insider trading, inside information and the insiders.

The act also gives power to the SECP to take legal actions whenever it sees false trading and market-grabbing transactions.

Part-3 of the draft act deals with clearing houses, their licensing and regulations as well as cancellation of their licenses.

The Asian Development Bank (ADB) had granted a technical assistance loan to the SECP as part of its ongoing Financial Markets and Governance Programme to strengthen the regulation, enforcement and governance of non-bank financial markets.

In August 2004, International Securities Consultancy Limited (ISC) was engaged as a consultant to review laws, rules and regulations administered by the SECP, including the Securities and Exchange Ordinance, 1969 or SEO 69.

In August 2004, the International Securities Consultancy Limited was engaged as consultants to review laws, rules and regulations administered by the commission, including the SEO 69 and to assess the adequacy of their provisions, identifying areas of overlap and any inconsistencies or lacunae in the laws.