Tarin directs setting up body for capital market development

ISLAMABAD: Finance Minister Shaukat Tarin on Monday directed concerned authorities to set up a coordination committee to implement recommendations for the development of the country’s capital market roadmap, which was prepared by the Capital Market Advisory Council (CMAC).

The minister chaired the first meeting of the CMAC held at the Finance Division. Special Assistant to the Prime Minister on Finance and Revenue Dr Waqar Masood, secretary finance division, Securities and Exchange Commission of Pakistan (SECP) Chairman Aamir Khan, HBL Chairman Sultan Ali Allana and other senior officials participated in the meeting. State Bank of Pakistan Governor Reza Baqir joined through a video link.

The CMAC was established in April 2020 under the Capital Market Development Plan (CMDP). In the maiden meeting, the secretary finance briefed the members of the council that the purpose behind the CMAC was to introduce reforms in the capital markets in the country.

Tarin said the establishment of the council was long overdue, as capital markets improve risk sharing and the efficiency with which capital was allocated to the real economy; thereby boosting economic growth and development.

“The underlying rationale is to attract investors, especially ones with lesser resources, to contribute in capital markets so that their limited resources are channelized into more productive use,” the minister said. “The reforms will be introduced after having input from all the relevant stakeholders.”

The minister directed to form a coordination committee for smooth implementation of the TORs of the CMAC. He further directed to include members from the SECP, SBP, Pakistan Banking Council, commercial markets, legal counsel and an expert on Islamic banking in the coordination committee for a comprehensive stakeholder’s feedback.

It was also decided that the SECP would be the secretariat of the coordination committee and SECP chairman would be the head/secretary of the committee. It was agreed that the coordination committee would meet once every month and send its recommendations for review to the apex committee of the CMAC that would issue directions to SECP and other relevant stakeholders for final implementation.

It is worth mentioning that the SECP is working on a CMDP in coordination with stakeholders. The proposed plan would focus on five areas: investor education and expanding outreach of the capital market to masses; encouraging new listings; introduction of new products; improving coordination with various regulators and government bodies; and revamping legal framework.

The SECP had discussed the plan with the stock and commodity exchanges, the Central Depository Company (CDC) and the National Clearing Company (NCCPL) for developing the strategic plans for the capital market.

For revamping of legal and regulatory framework, it suggested corporatization / demutualization of stock exchanges and separation of their regulatory and business development functions.

Moreover, measures would be taken to facilitate new listings for attracting corporates with a large capital base to list through various debt and equity instruments. The plan has stressed the introduction of new products and systems; reviewing/revamping existing products and market segments, including development of Islamic products.

Greater efforts would also be undertaken for introduction of Islamic products. Additionally, measures would be taken for development of debt capital markets, commodity and currency markets, mutual fund industry, and real estate investment trusts.