ISLAMABAD: The Secu­rities and Exchange Comm­ission of Pakistan (SECP) has approved Securities Excha­nges (Licensing and Operat­ions) Regulations 2016 to stre­ngthen the capital market.

The regulations, which have been finalised after detailed stakeholder consultations, have been published on the SECP website, according to a statement issued on Saturday.

Necessary checks have been specified in the regulations to ensure that the securities exchange operates in a manner consistent with investor protection principles and international norms of securities’ regulation and financial market infrastructure.

The regulations cover matters relating to licensing, financial resources, duties and obligations, audit and accounts, appointment and conduct of directors, fit and proper criteria for directors, officers and shareholders of the securities exchange.

Improved governance requirements have also been specified, which include requiring the exchange to have 50 per cent independent directors on its board.

In line with the best international practices, a securities exchange will be required to constitute a regulatory affairs committee comprising independent directors and ensure segregation of commercial and regulatory fun­ctio­­ns under a segregation plan.

Also, the securities exchange will be required to undergo a mandatory annual audit of its operations, regulatory functions and IT systems to ensure integrity, effectiveness and transparency.

A securities exchange will be required to ensure maintenance of necessary infrastructure, human resources, policies and procedures to effectively discharge its responsibilities.

A securities exchange will also be required to develop and submit to the SECP a comprehensive three-year business development plan, including financial projections, product and market development plans, plans for outreach and education of investors and market participants.

Published in Dawn, October 30th, 2016