ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) Policy Board on Wednesday noted that the stock market was suffering from over-regulation and directed the regulator to rationalise fee structures and stop annual renewal of brokers.

The policy board meeting was chaired by Professor Khalid Mirza. Chairman Pakistan Stock Exchange (PSX) Suleman Mehdi gave a presentation to the Policy Board.

Mr Mehdi highlighted the regulatory and policy issues confronting stock market intermediaries and other operators in the market.

The presentation showed that the annual renewal of stock brokers by the SECP should be conducted after three years, on the grounds that it was repetition, while almost same inspections were conducted by the Central Depository Company, National Clearing Company and the SECP.

While acknowledging PSX concerns, the policy board recommended that there should not be any renewal by the SECP as it has the powers to impose penalties and even suspend operations of any brokers.

The policy board noted that ‘wrongdoings should checked all the time and penalties be imposed accordingly’.

The policy board also noted that the rules and regulations regarding stock market and the stock brokers have been framed assuming that the market players were culprits.

“The SECP should get rid of unnecessary regulations, but as a watchdog enforcements have to be tough, across the board, and fair,” Prof Mirza told Dawn after the meeting.

The SECP Policy Board agreed in principle to all the measures proposed by the PSX, including reduction of 8 basis points (bps) fee on every rupee under management of mutual funds, which costs funds around Rs450 million a year, to 2 bps.

The policy board had earlier formed three committees — Regulation, Oversight and Governance — to identify reforms and improvement measures in the sectors regulated by the SECP.

Published in Dawn, December 20th, 2018