Tax reforms give capital market a level playing field, says SECP chief – Business & Finance

ISLAMABAD/KARACHI: Chairman of the Securities and Exchange Commission of Pakistan (SECP), Aamir Khan, on Wednesday informed stock brokers that tax reforms have provided a level playing field for the capital market, resulting in the withdrawal of the withholding tax and capital value tax. (CVT) and Capital Gains Tax Reform (CGT).

According to a presentation made by the SECP Chairman to stockbrokers of the Pakistan Stock Exchange (PSX) Limited on Wednesday, SECP’s constant interaction with the Ministry of Finance and the Federal Board of Revenue (FBR) to push for a fair game in the field of capital markets which led to the abolition of withholding tax and the CVT, the reform of the CGT and its alignment with real estate.

The copy of the presentation available with company registrar revealed that SECP has taken a number of steps to make it easier for stockbrokers to conduct business.

The SECP Chairman also shared the progress of the capital market development plan with stock brokers.

The SECP Chairman also instructed brokers to make efforts to increase awareness of debt/ETF instruments and create liquidity in the debt/ETF market, ensure strict compliance with FATF/AML requirements to exit the FATF gray list, forge partnerships and develop alliances with banks. and telecommunications companies.

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SECP initiatives included simplified regulations, efficient processing of listing applications, gradual increase and extensions to achieve minimum net worth of T&SC brokers, simplified broker licensing regime with submission requirements minimum requirements, relaxed approval requirement for transfer/sale of shares between existing identified sponsors, simplified documentation requirements for acting as Issuance Consultant (CTI), Underwriter and Securities Trustee debt and relaxation of net worth requirements for the transfer of shareholding by deed of gift or inheritance.

SECP’s operational measures included a new brokerage regime, regulatory requirements commensurate with the services offered, operationalization of PCM to provide operational ease and efficiency to ‘TO brokers’ – 35 TOs successfully migrated to PCM. The SECP also reduced the reporting burden on stockbrokers by removing the requirement for a separate limited assurance report and streamlining reporting requirements for Liquid Capital statements.

The SECP has also facilitated brokers through Account Facilitation/Customer Help Centers in conjunction with banks, AMCs, insurance companies, etc.

Sharing new measures for the development of the capital market, the SECP shared measures to improve the liquidity of stock brokers. The measures included reforms of leveraged products, namely Murabaha equity financing (MSF), SLB, MTS and margin financing; implementation of the netting mechanism the next day; increase in eligible titles in DFC and MTS; 90-day deliverable futures contracts; Exchange traded funds.

SECP has introduced Shariah-compliant trading functionality on KITS in partnership with Meezan Bank.

The SECP also introduced the first fundamental stock market index – the Dividend 20 Index which tracks the performance of the top 20 dividend paying companies. Ongoing work on ESG to promote responsible investment and improve corporate performance on climate risks and introduced a dedicated real estate sector for better representation of sector performance, the EWR regime, the issuance of Maize-Paddy-Rice EWR and REIT Framework Redesign.

The SECP has also introduced new concepts to broaden the reach of investors; digital integration on PSX; Centralized gateway portal; Shared KYC mechanism (Brokers – 37 on board, five in progress; Banks – eight on board, five in progress); EMLAAK- Digital Distribution Platform for Mutual Funds; eIPOs; improved limits for the Sahulat account and regulatory provisions made to facilitate the implementation of the wallet account.

The SECP has also improved engagement with broker representatives. In this regard, the SECP has also improved communications with brokers through periodic meetings and letters, the formation of a trading forum and a broker group by PSX for regular interaction with the broker community. to discuss business and operational matters.

Pakistan Stock Exchange (PSX) hosted a visit by SECP Chairman Aamir Khan and his team including Asif Iqbal, Head of PRDD-SMD Department, during which they were welcomed by the Chairman of PSX , Dr. Shamshad Akhtar; Managing Director and CEO Farrukh H Khan; Members of the board of directors and senior executives of PSX.

The SECP Chairman held a meeting with the PSX team and market participants, which included representatives from over 100 TREC holders. CDC CEO Badiuddin Akber and NCCPL CEO Muhammad Lukman were also present at the session.

The objective of the meeting was to review all facets of capital market development, challenges, current progress, ongoing developments and review the overall vision set out for capital market development.

The meeting was well attended by the securities brokerage industry. Karachi-based brokers participated physically, brokers from Islamabad and Lahore joined the session via video link.

During the session, high profile market participants including Munir Khanani of Munir Khanani Securities, Rizwan Khan of JS Global Securities, Noman Adam of Adam Securities, Mohammad Sohail of Topline Securities and Afroze Merchant of Merchant Investments made valuable suggestions which were noted by the President. and the SECP team as well as PSX management.

Copyright Business Recorder, 2022

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