ISLAMABAD: A new integrated national bourse, Pakistan Stock Exchange (PSE), will soon replace the stock markets of Karachi, Lahore and Islamabad, a joint meeting of their demutualisation committees decided on Tuesday.
A formal memorandum of understanding (MoU) in this regard will be signed on Thursday (tomorrow) in the presence of Finance Minister Ishaq Dar.
The meeting, chaired by the chairman of Securities and Exchange Commission of Pakistan (SECP), discussed the way forward for the country’s capital market in view of global trend towards consolidation and integration of stock exchanges.
The integration is expected to help reduce fragmentation of market and create a strong case for attracting strategic partnerships necessary for providing technological expertise and assistance.
It was agreed that for sustainable development of the capital market, the three stock exchanges will enter into an MoU that will subsequently be approved by their boards of directors and general bodies.
Meanwhile, the SECP’s policy board has given a nod to increase the minimum paid-up capital requirement for insurance companies, which is expected to improve capacity of local insurers to underwrite larger risks and retain sizeable share.
The policy board has approved an amendment to the Securities and Exchange Commission (Insurance) Rules 2002, increasing the minimum paid-up capital for both non-life and life insurance companies by Rs200 million, to Rs500m and Rs700m respectively.
Moreover, the amount of minimum paid-up capital will be net off any discount offered on issue of shares.
These new capital requirements would be applied in phases in two years (by Dec 31, 2017).
At the time of enactment of the Insurance Ordinance, 2000, the minimum paid-up capital requirements for non-life and life insurance companies were Rs80m and Rs150m. They were increased to Rs300m and 500m in 2007.
In 2012, the SECP formed an Insurance Industry Reforms Committee (IIRC) to evaluate the challenges faced by the insurance industry of Pakistan and recommend regulatory reforms that best suit the growth of the industry.
Published in Dawn, August 26th, 2015