ISLAMABAD: Senate on Thursday approved the Securities and Exchange Commission of Pakistan (Amendment) Bill 2016, along with two other bills of the finance ministry that have already been approved by the National Assembly.

The SECP Bill 2016 will facilitate better superintendence and control over capital and financial services market, corporate sector and insurance industry bringing the SECP on a par with its international counterparts.

The three bills were passed by Law Minister Zahid Hamid in the absence of Finance Minister Ishaq Dar.

The new law is aimed at covering all deficiencies and shortcomings in the existing law.

The SECP succeeded the Corporate Law Authority (CLA) in 1999 as a unified regulator of capital markets and for superintendence and control of corporate entities.

Since then, many amendments have been made to enhance functioning, such as floatation, management and regulation of modarabas (1999), insurance sector (2000), non-banking financial companies sector (2002), commodity futures market (2003), real estate investment trusts (2008), etc.

The new law will meet the local and international requirements for the corporate sector regulator, including the requirements of the International Organisation of Securities Commissions (IOSCO).

“Still there are major deficiencies in the existing law, the SECP Act 1997,” said an official of the SECP.

These deficiencies include limited financial/administrative independence of the SECP, lack of provisions on Acting Chairman, power to constitute committees, task forces, etc. and number of members in the SECP Policy Board. Besides, the SECP has ineffective enforcement powers to call for information, lack of process for prosecution of cases, recovery of penalty, delay in decision of court cases, ex parte stays and inadequate investigation powers.

In order to introduce transparency, provisions regarding disclosure of information in public interest along with statutory powers to assess potential and emerging systemic risks in the capital market have also been introduced in the Bill.

It also provides the framework for the establishment of an independent Audit Oversight Board to ensure quality of audit of public interest companies and an effective mechanism and self-regulatory organisations (SRO) to ensure compliance with regulatory regime of the regulated sectors.

The Bill aims at providing detailed provisions regarding prosecution of offences by the SECP while powers pertaining to investigation, enforcement and call for information have been enhanced.

The promulgation of the new law will also enable SECP to seek international cooperation and extend assistance to a foreign regulatory authority in investigation and inquiries as the current law has no statutory provision to that extent.

The other two bills are Credit Bureaus (Amendment) Bill 2016 and the Financial Institutions (Recovery of Finances — amendment) Bill 2016. The Bill will become an Act after receiving the President’s assent.

Published in Dawn, July 22nd, 2016