The 2015 Securities Act has given the Securities and Exchange Commission of Pakistan (SECP) powers for investors’ protection and it is aimed at fostering growth of the securities market.
The SECP organised a briefing for journalists on the new securities law on Monday. The SECP officials from the Securities Market Division briefed the media on the 2015 Securities Act while the SECP’s senior management answered journalists’ questions through a video link.
A detailed comparison of the new Securities Act with the 1969 Securities and Exchange Ordinance was given to journalists. It was pointed out that the new law has been promulgated to introduce the best international practices and incorporate the International Organization of Securities Commission principles of securities regulations.
Under the1969 law, the SECP had no powers to intervene for investor protection and to handle investor complaints. The old law contained no provisions for the process for recovery of penalties imposed by the SECP, duties of securities exchange, system audit of stock exchanges, regulation of clearing houses and central depository and other front line regulators.
In the new law, the functions of securities exchanges and brokers have been segregated from the futures exchanges and futures brokers. The concept of licensed persons and regulated persons has been introduced in the new law. The agents’ regime has been replaced with the concept of representations and the concept of securities advisor; securities manager and shelf-registration have also been introduced in the new law.
The new law also enables establishment of Central Counter Party (CCP), establishment of various classes of securities brokers, minimum entry standards, criteria for sponsors, directors and employees and code of corporate governance.
In order to prohibit the insider trading and other market abuses, the offense of insider trading has been declared a criminal offence in the new law. The law has clearly defined inside information and insiders; false trading and market rigging transactions; market manipulation and other kinds of fraudulently inducing trading in securities, i.e. employment of fraudulent or deceptive devices (schemes) and false or misleading statement inducing securities transactions.
