ISLAMABAD, May 7: The Securities and Exchange Commission of Pakistan (SECP) has started negotiations with stock markets to find ways to remove any legal barriers that may emerge once the draft Demutualisation Law is tabled in the parliament for approval.

In order to avoid any fresh controversy, President Pervez Musharraf recently referred the draft Demutualisation Ordinance back to Parliament. The caretaker cabinet had approved the draft and submitted it to the president for approval as a law in January.

Now, the SECP and the three stock exchanges are holding meetings on the legal implications the referral of the draft law to the Parliament may have for the demutualisation process.

SECP Chairman Razi-ur-Rehman told Dawn on Wednesday that legal experts of Karachi, Lahore and Islamabad stock exchanges had started meetings on how to remove legal barriers (if any) and ensure the smooth implementation of the demutualisation process.He said the SECP had taken the ministry of finance on board on the issue.

“We have received a very positive response from the finance ministry and both the ministry and the SECP want the early and smooth implementation of the demutualisation process,” Mr Razi observed.

He said the SECP was vigorously pursuing the capital market reform process with a goal to enhance investor’s confidence and improve the monitoring and surveillance system.

In response to a question, he said the SECP had also approached the finance ministry and was ready to sit with the State Bank of Pakistan (SBP) and remove ambiguities in the way of the implementation of the Financial Services Commission Act of Pakistan.

“We are always open for talks,” Mr Razi said while describing the benefits which the FSCA will have for the country.

He said the SECP did not try to intervene in the jurisdiction of the SBP by introducing the act, which was also a proposal of the Asian Development Bank (ADB) under the second generation capital market reforms.

The SECP chairman said that due to the risk management and transparency measures taken by the commission, manipulations in the capital markets had been minimised to a large extent.

“No major decline has been witnessed in the Karachi Stock Exchange in 2007 despite being a turbulent year, which was mainly due to the risk management measures taken by SECP in the previous year,” he claimed.

A market surveillance system will be put in place by the commission very soon, which would further minimise the chances of manipulating the capital markets. Important initiatives like introduction of Universal Identification System (UIN) and Position Limits had been taken for investor protection, he said.

He said all efforts of the SECP were geared to avoid systemic risk, trading manipulations and front running. He said the commission had paved the way for international strategic investors to invest in Pakistani markets.

Answering a question on the development of corporate sector, Mr Razi said the number of registered companies was on the rise due to the facilitation offered to the business community. The number of companies registered with the SECP has crossed 50,000, while it was below 40,000 in 2006, which shows a sharp growth of the corporate sector.

He informed that through the online facilities offered by the SECP, name availability and company registration had become extremely easy, while the Easy Exit Scheme offered an easy source to close a company. The commission had initiated e-services and scanning and archiving projects to facilitate the business community.

The SECP chairman said that with the introduction of Book Building, new listings in the capital market would increase.