Incorporating the latest advancements in technology, giving more power to investigate the insider trading, enhancing fines and allowing imprisonment for defrauding investors, the government on Monday notified the promulgation of the Securities Act, 2015.
The government had to promulgate the new act under the International Monetary Fund (IMF) loan conditions before the start of the next financial year. The law allows incorporation of electronic mail, transactions and video for investigations.
The new law will replace the 1969 Securities and Exchange Ordinance. The modern law is aimed at removing the deficiencies of the earlier law and covering developments in the securities market over time.
An official source said that the new law allows investigations on the basis of pattern of trading, and electronic data and transaction will be taken as evidence. It will allow the Securities and Exchange Commission of Pakistan (SECP) to not only impose hefty fines and imprisonment for people involved in insider trading or other frauds.
The new Securities Act will bring the Central Depository Company (CDC) and National Clearing Company of Pakistan Limited (NCCPL) formally under the umbrella of SECP. It will allow formulation of rules for the two entities as at present, both operate under a notification.
CDC is the sole entity that handles the electronic settlement of the transactions carried out at the local stock exchanges. NCCPL provides clearing and settlement services to the all the three local stock exchanges.
The new act was promulgated after the presidential assent and publication in the official gazette. It has been framed by the SECP after detailed consultations with key stakeholders and incorporating feedback from the Senate’s Standing Committee on Finance and Revenue.
It has been drafted to achieve effective regulation of the securities market and enhanced protection of investors and the public in general. It will improve integrity, credibility and efficiency of the market by establishing and enforcing principles, which ensure fairness and promote investor confidence.
The law incorporates global benchmarks such as IOSCO principles of securities’ regulation and investor protection, and provides for implementation of advanced reforms for preventing market abuses and manipulation practices.
It also provides for extensive disclosure requirements and safekeeping of investors’ assets and tends to establish control measures for elimination of conflict of interest for securities market intermediaries.
A number of new rules and regulations will be framed under the new law for effective, efficient and streamlined regulation of the securities market, including regulations covering provisions for investors’ protection and conduct and categorization of securities market intermediaries.
