ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has released a consultation paper on standard principles for recognition and conduct of industry associations, aimed at strengthening the country’s financial sector through enhanced self-regulation.

The proposed framework sets out a clear roadmap for eligible industry associations to transition into self-regulatory organisations (SROs) over the next three years. These SROs will be vested with the authority to set ethical standards, monitor industry conduct, enforce compliance, and drive sector-specific initiatives, all in alignment with SECP’s overarching regulatory objectives.

The SECP has added that in the current dynamic regulatory landscape, industry associations are increasingly moving beyond their conventional role as advocacy bodies. Globally, they are being recognized as vital contributors to economic development by engaging in policy dialogue, supporting regulatory compliance, and fostering responsible industry practices.

Key features of the proposal include the mandatory conversion of trade associations into Section 42 of the Companies Act, 2017, ensuring they operate as not-for-profit entities. This aims to enhance transparency, strengthen governance, and uphold financial integrity.

The framework also aligns with international best practices, emphasizing diverse and merit-based membership, strong governance, conflict-of-interest safeguards, stakeholder engagement, fair dispute resolution, a robust code of conduct, and ongoing investment in training of members and investor education.

Published in Dawn, May 13th, 2025