SECP revising NBF sector regulatory framework

ISLAMABAD, September 9: Keeping in view the inherent risks in the present composition of the financial sector, the Securities and Exchange Commission of Pakistan (SECP) is the process of revising the NBF sector to reform the entire financial sector.

Mr. Imtiaz Haider, the SECP Commissioner for Specialized Companies Division, has said that the roadmap was rolled out in the form of a report in March 2013. In the said report, the SECP suggested to develop an alternative financial system by way of promoting non-bank financial (NBF) sector to diversify the inherent systemic risk and provide different asset classes to promote savings as well as meet the specific needs of participants. Other recommendations included some macro-level suggestions regarding taxation regime, encouraging long-term savings and channeling these savings to under-served segments.

Mr. Imtiaz Haider further said that a good number of marketing professionals, industry participants and financial institutions provided comments on the report. Moreover, some new ideas were also received. The SECP has analyzed the feedback given by the public on the suggested reforms.

Considering the suggested way forward given the report and comments received from the public, the SECP has now started the process of revisiting prevailing regulatory regime for the NBF Sector.

The proposed way forward can be categorized into two parts. The first part requires longer time periods for implementation as it requires the consent of different stakeholders such as State Bank of Pakistan, Ministry of Finance and Federal Board of Revenue etc. as well as amendments to various statutes. Prior to considering the implementation of this part, the SECP will consider State Bank’s feedback on the way forward suggested in the report.

The second part can be implemented in the short run as it requires changes to the existing regulatory framework without the involvement of any external stakeholder. The SECP has initiated the process and the requisite amended framework would be implemented during this calendar year after completing the public consultation process.