ISLAMABAD - Securities and Exchange Commission of Pakistan Chairman Zafar Hijazi has said that government has presented Securities Bill 2014 before the Parliament in order to replace the existing Securities and Exchange Ordinance 1969 with the objective to strengthen SECP.

He said this while briefing the Senate Standing Committee on Finance and Revenue, which met under the chair of Senator Nasreen Jalil on Thursday at parliament house. He informed that existing Securities Bill was approved in 1969, which needs to replace now as market circumstance has entirely changed across the world. It is necessary to approve the Securities Bill 2014 in order to control and manage the situation relating to the securities market, he added.

Hijazi informed the committee about the resolve of the apex regulator to ensure fair and transparent market and protection of interest of investors. He said that there would be no compromise on the investors’ interests and there would be zero tolerance for market misconduct and unfair trade practices. In order to effectively discharge its regulatory role the SECP has strengthened its enforcement functions by increasing the size of the market surveillance team and upgrading its infrastructure. The Senate Standing Committee taken up the Securities Bill 2014, which was presented by the government in Senate in order to replace the existing Securities and Exchange Ordinance 1969 with the objective to enhance powers of the regulators. The Senate Committee on Thursday agreed that the aforesaid bill is an important bill, which should be approved after incorporating the recommendations of the members of the Committee in next meeting.

Zafar Abdullah, Commissioner Securities Market Division (SMD) on a question about insider trading explained related provisions under the law. While responding a query about risk management mechanism, he explained the current structure in place at the stock exchanges.

At present securities market is being regulated by the SECP under the 1969 Securities and Exchange Ordinance, Imran Iqbal Panjwani, Executive Director, SMD explained. In order to encapsulate developments especially post demutualisation, in the securities market over a period of time, to introduce the best international practices and incorporate the IOSCO principles of securities regulations, it is important that 1969 SEO be replaced with a comprehensive modern and all-encompassing law.

Panjwani also mentioned some recent reforms initiated by the SECP, which includes a regime of “assets under custody” whereby a broker shall be allowed to keep client assets only up to 25 times of its capital adequacy level.  The draft bill aims to remove the deficiencies and gaps in the 1969 SEO, and seeks to streamline the patchwork in this law. It will provide a detailed and comprehensive regulatory structure which, includes provisions for prescribing eligibility criteria for licensing of all market intermediaries including the stock exchanges, the clearing company, the central depository company, stock brokers, agents of stock brokers, underwriters, balloters, transfer agents etc.

It provides requirements for prescribing fit and proper criteria for all entities licenced under the act and for ensuring compliance with the same on a continuous basis. It also provides for a more effective enforcement regime. It also grants powers for strict disciplinary actions in cases of violations of law, including full range of penalties.

The proposed law also has detailed provisions relating to the duties and responsibilities of stock exchanges, central depository and clearing houses; insider trading offence and disciplinary actions thereof; powers to make regulations for anti-money laundering; enabling provisions for prescribing code of conduct for brokers, securities advisors and analysts.

Senators Nuzhat Sadiq, Mohammad Talha Mahmood, Saleem H Mandviwalla and Rafique Rajwana also attended the meeting.