KARACHI, Sept 29: Securities and Exchange Commission of Pakistan (SECP) finally appeared on Saturday with explanation about the much talked about and most disputed the proposed power sharing Financial Act.

The SECP dismissed the impression that the Draft Financial Services Commission Act (Draft FSC Act) was a plan to minimize the State Bank’s powers as regulator and that it was an expansion plan of the SECP.

The commission also commented that “either the State Bank has not understood this framework or is proposing to change the current set up.”

The question raised by the State Bank regarding the Financial Act was addressed one by one and most of the time SECP expressed its opinion that neither it wanted to grab powers from SBP nor it was a SECP expansion plan.

“This fear of the State Bank is absolutely unfounded and baseless. The commission has not even contemplated this move, let alone attempted to do so through formulation of the Draft FSC Act. The current draft does not empower the commission to regulate the banking and money market services,” said the SECP.

The major concern is that the Draft FSC Act attempts to bring within the ambit of the commission the banking sector currently regulated by the State Bank.

“To bring an end to this controversy and to ease SBP fears, we have accepted the State Bank’s suggestion that the definition of the term “Financial Services” provided in the proposed Act should expressly exclude the banking and money market services,” said the SECP.

The SECP also refused to accept that by amending a schedule to the draft Act, the commission or the federal government would be able to change the entire regulatory framework of the banking business contained in numerous primary legislations.

“This is the position of the law and regulatory framework as it stands today and the FSC law does not propose any change in this setup,” said the SECP.The commission made it clear that “it no longer only regulates ‘securities’ and ‘exchanges’ but the entire corporate sector in the country, minus banking and money market services”.

Defending the power to freeze bank accounts, the SECP said this power will be exercised by the independent Financial Services Tribunal and not by the commission itself.

“Once again, it is pointed out that these powers already exist in various laws, which the commission currently administers and, therefore, there is nothing new in the Draft FSC Act,” said the SECP.

The SBP is concerned that the proposed tribunal under the FSC Act should not be given so many powers.

However, the SECP defended it by saying that presently, it was nearly impossible to successfully prosecute serious offenders, who have committed complex financial irregularities due to numerous reasons, among which the most common one is lack of expertise and skills of the adjudicators.

“It is only natural that where we have special tribunals for the banking business, Modaraba business and insurance business, we should also have specialised tribunals for the financial sector,” said the SECP.