Designfreebies free InDesign newsletter template 2

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN NEWSLETTER SPRING EDITION | 2015 Editor: Syed Nazir Bokhari editor Production: Shakil ahmad Chaudhary Editor Production: Sajid GoNdal Snr.Graphic Designer: StephaNie WoNG EVENTS WORKSHOPS OTHERS Finance Minister Senator Ishaq Dar Finer Points of Professionalism SECP Paperless Initiative 2nd Table Tennis Tournament IOSCO Webinar Limited Liability Partnership Act

NEWSLETTER 2015 CONTENTS 3 FINANCE MINISTER ISHAQ DAR 5 LIMITED LIABILITY PARTNERSHIP ACT 7 SOCIAL BUSINESS AND SOCIAL CAPITAL MARKETS 8 SECP NEWS BULLETIN 13 SECP OFFICERS BENEFIT FROM IOSCO WEBINAR 13 CORPORATE GOVERNANCE WORKSHOP 14 SECP EMPLOYEES ADOPTS A RESOLUTION AND MAKES A COMMITMENT 16 SECOND SECP TABLE TENNIS TOURNAMENT 18 DUA FOR THE MARTYRS OF THE PESHAWAR ARMY PUBLIC SCHOOL 18 ORIENTATION SESSION FOR STUDENTS OF UNIVERSITY OF SCIENCE AND TECHNOLOGY BANNU 19 IN-HOUSE WORKSHOP ON ‘THE FINER POINTS OF PROFESSIONALISM’ 20 SECP’S INITIATIVES FOR PAPERLESS ENVIRONMENT 21 INSIGHTS ON ISLAMIC FINANCE

Federal Minister Senator Muhammad Ishaq Dar addressing SECP Employees Finance Minister appreciates SECP initiatives F ederal Minister for Finance, highlighted the immense potential work. In this connection, he especially Revenue and Statistics Senator of the NBFIs and Insurance Sector. He Muhammad Ishaq Dar has desired detailed presentations on these mentioned the SECP’s recent initiatives emphatically asked the Securities and Exchange Commission of sectors based on the ideas presented includings development of Sukuk Regulations, Book Building Regulations, so that necessary steps can be agreed Pakistan (SECP) to adopt policy of and implemented for the development Unit Link Rules for Life Insurance, zero tolerance against insider trading of these crucial segments. approval of REITs etc. He expressed and set example by identifying and his concern that the full potential of penalizing black sheep in stock the Pakistan Mercantile Exchange market so that it serves as deterrence Limited was not being realized and and the menace is curbed. hoped that the SECP Chairman would take necessary measures for the He said that incidents of insider development of the commodities trading and market manipulation like market in Pakistan. price manipulation, blank selling, front While advising the SECP to running etc. severely damage the small submit its tax proposals on priority investors and must be curbed for the Later, while addressing the SECP he cited example of tax avoidance in protection of investors’ interest. employees he said that the role of relation to tax levied on bonus shares. During his visit to SECP head SECP is not limited to regulate the He assured his confidence that this office here on February 16, detailed corporate and capital sector, but also issue will be settled in favour of the presentations were delivered by the to facilitate and protect small investors. government. SECP chairman and commissioners He complemented the SECP Chairman While giving future guidelines, in relation to the SECP reform agenda Mr Zafar Hijazi and his team for their the Finance Minister said that Pakistan and areas requiring the government’s excellent performance and enhancing had to go a long way towards the support. The Finance Minister while SECP’s regulatory role and hoped that development of financial institutions appreciating the SECP’s efforts they will continue the current pace of for long term funding as commercial SECP 2015 - Newsletter 3

banks cannot fulfil the financial needs He said that the government legislations crucial for the development for the development of industrial had taken measures to make Pakistan of sectors under SECP preview. sector. economically a sovereign country. He Chairman Zafar Hijazi while He referred to the laudable said when the present government welcoming the Finance Minister services of SECP’s previous chairmen took over, all the international financial assured him that the SECP employees who built the organization. In this institutions were were totally connection he said the founding fearing that the committed Chairman of the SECP, Mr. Shamim Pakistan would THE CHAIRMAN to their jobs Ahmad Khan, worked hard to put the default by 2014, ASSURED THE FINANCE and were SECP on sound footings and making it a but now with making their credible regulatory authority. Likewise, positive and sincere MINISTER THAT SECP best efforts to the services of former SECP Chairman steps, not only the EMPLOYEES ARE meet public Tariq Hasan and Khalid Mirza are also financial credibility expectations. praiseworthy. of Pakistan has TOTALLY COMMITTED He said that increased but the TO MAKING THEIR BEST the SECP is foreign reserves very firm in its which earlier stood EFFORTS TO MEET mission of the at $7.5 billion are PUBLIC EXPECTATIONS development now in the range of of a transparent $16 billion. and vibrant The Finance capital market, Minister agreed with the Chairman efficient and compliant insurance, SECP’s request for having its own NBFC and corporate sectors. building and assured his support in this regard. He also assured his full support in expediting enactment of various 4 SECP 2015- Newsletter

The Much Awaited Limited Liability Partnership Act Shane Coelho I n pursuit of achieving its cardinal been moved, which will provide formed with the objects of welfare. objectives as embodied in the an enabling environment for the LLP is a hybrid business mission statement and to remain in growth and regulation of professional model combing the characteristics sync with global business practices, the Securities and Exchange services sector. It is envisaged that of a ‘corporation’, ‘company’ and ‘partnership’, blending together the the proposed law to broaden the Commission of Pakistan has taken yet corporate sector by bringing this benefits of these business forms. another initiative, which is directed large and unregulated segment The LLP is a partnership in which all at the growth and regulation of the under the regulatory framework. This partners have limited liability in an Pakistani corporate sector. business structure shall appeal to incorporated entity and the legal lawyers, chartered accountants, cost entity is separate from its partners. The At present, the options available accountants even small entrepreneurs concept of limited liability partnership under the 1984 Companies Ordinance or other professionals perhaps doctors was introduced for the first time in the for the formation of a legal entity are a and engineers for carrying out their United States in the 1990s. The idea “public company”, “private company”, professional practice while enjoying of LLP was well taken and many other “single member company”, “association the benefits of limited liability. countries such as the UK, Singapore, not for profit” and “guarantee limited It is an ideal opportunity for India, Japan, South Africa, introduced company”. With the passage of time, small entrepreneurs to reassess their laws for governing LLPs. the professional services sector has business structure and reorganize it in One of the key differences shown an appreciable growth. The a smart manner under the LLP regime. between a general partnership and LLP only option currently available is for a Small entrepreneurs can reap financial is that whilst in a general partnership few professionals is to join and form benefits such as setting up the business individual partners are personally a general partnership. However, a at a lower cost, registering higher liable for the partnership’s debts and general partnership does not have a profit margins, with reduced chances obligations, a LLP provides each of its legal personality. It merely comprises of facing legal consequences. The of its partners, unlike a company, law aims to make these professionals which is an artificial person, it cannot globally competitive and by having a create a charge on its assets, contract corporate identity their contribution in its own name or hold property. In shall be recorded in the nation’s fact, contracts made are enforced economic growth. against partners either individually or However, an LLP cannot be jointly with each other. Without the formed for charitable purposes partners, therefore, a partnership has because it has been designed for no existence of its own. mutual benefit and profit earning Hence, the bill on “The Limited through commercial purpose, whereas Liability Partnership Act 2014” has a charitable organization or trust are SECP 2015 - Newsletter 5

agreement between the partners capital at the time of incorporation or between the LLP. • Level of contribution required • The LLP shall be liable to the full by each partner at the time of extent of its assets with the liability incorporation/entry into the LLP; of the partners being limited to • Methodology for distribution of their agreed contribution in the profits; LLP. • Taxation issues on amalgamation • No partner shall be liable to the and merger, earnings, etc. independent or unauthorized • Taking the provincial governments action of the other partners or on board to avert delay in their misconduct. promulgating the act • Every LLP shall have at least one • Factors/determinants of solvency partner as designated/managing and measures to mitigate the partner whose duties and possibility of insolvency. obligations shall be provided in • The act will entail consequential individual members the protection the law. He shall be a resident in amendments in the 1961 against personal liability for certain Pakistan. Chartered Accountants Ordinance partnership liabilities and limits the • Lesser compliance requirements. • Requirement and significance of liability of each partner. • Easy registration (payment of financial capital versus intellectual a flat fee, statement by every capital at the time of incorporation person who is to be partner of • Level of contribution required An LLP can be formed the LLP, partnership agreement by each partner at the time of incorporation/entry into the LLP; containing the proposed name when two or more of the LLP, nature of business to • Methodology for distribution of persons enter into a be transacted, physical existence/ • profits; registered office, details of all Taxation issues on amalgamation business relationship partners /designated partner, and merger, earnings, etc. with a view to making minimum capital requirement • Taking the provincial governments and minimum contribution by the on board to avert delay in profit. partner(s)) promulgating the act • Easy exit • Factors/determinants of solvency • Transfer of ownership (legal heirs and measures to mitigate the As the name suggests, it has the to assume partnership possibility of insolvency. features to protect the partners’ liability. • Provides for conversion of existing Any debts and obligations of the LLP status This concept of limited liability will be borne by the assets of the LLP • Exemption from audit partnership shall have far-reaching and not that of its partners. • Income tax to be charged in the impact particularly in the context In a company, the constitutional hands of the LLP and not in the of emerging and changing global document is the Memorandum and hand of the individual partners economic trends which will not only Articles of Association, which binds all • Maintaining solvency enable investments but also provide shareholders and directors. However, • Foreign investment allowed in LLP an opportunity to LLPs to compete under an LLP the rights and duties of subject to approval by the Interior internationally. the partners of an LLP and is the LLP shall Ministry be governed by the LLP agreement. --------------------------------------------------- Unlike a company, which is subject to Feedback/Comments: stringent compliance requirements The writer is a senior of the law, an LLP shall be provided At present, the draft has been executive secretary, with flexibility of organizational disseminated and the SECP has invited currently working arrangement and comparatively fewer public opinion and comments, which with the in charge, regulatory compliance requirements. shall be considered and incorporated CRO, Karachi. She in the act, prior to its promulgation. is a graduate in The Salient Features of a Limited Some of the feedback/suggestions humanities from Karachi University. Liability Partnership are: that have been found viable are listed here below: • The LLP is a body corporate and legal entity separate from its • The act will entail consequential partners. amendments in the 1961 • The LLP will have perpetual Chartered Accountants Ordinance succession. • Requirement and significance of • The LLP shall be governed by an financial capital versus intellectual 6 SECP 2015- Newsletter

Social Business and Social Capital Markets ‘When greed is good’ Zohra Sarwar Khan C onventionally, capital markets connect investors who have money with entrepreneurs who have ideas but less money. Specialized institutions facilitate this exchange of capital and information between investors and businesses. Financial reports, financial analyst, research reports and financial intermediaries further assist efficient and effective allocations of capital from investors to companies. The mechanism for guiding funds to non-profits is rather less developed. Although nonprofit produce audited annual statements but mostly such report reveals virtually nothing about its effectiveness or efficiency in creating social value. The links between the outcome and management’s decisions and strategy is lacking in financial reports. There are no public databases or experts that collect, standardize or compare data that deduces results regarding social impact. Also, the ongoing pressure for procuring funds for projects often makes non-profit organizations more vulnerable to their to pick work over school to a classroom where their work is major donors’ special preferences and demands, distracting turned into income. It is a venture that is fraught with all sorts them from their core mission and potentially compromising of obstacles and challenges. “When people see what we’re future performance. The traditional financial expense ratio doing, they understand the financial return involved,” says makes the traditional profit market appear better managed Gul. It may not be immediately from the bags her company than the non-profit organization. sells. Its yields are longerterm, in the educated girls and the However, slowly a new breed of donors is changing the communities that they’re a part of. An educated individual, terrain, i.e. successful internet gurus, entrepreneurs and other Gul argues, is a financial return beyond measure. At this year’s business leaders look at how they can create value in the SoCap she is hoping that others will see those dividends. “I’m philanthropy as they have in traditional profit making market hoping to work out some deals,” she says. place. This has given way to renewed interest in using the For decades, there is perception that there is no philanthropic/charity funds as capital investment, i.e. while precise way to measure value creation by non-profit/ social charitable, these funds are still capital investments of precious enterprise. But there are ways about value in terms that resources. The term social business and social capital markets tell us whether or not we are moving in the right direction. therefore emerged as a consequence of this paradigm. Social Finding space and opportunities in social capital market and business , as the term has been commonly used since, was social business a concept still in infancy, is the way forward defined by the Nobel Peace Prize laureate Prof. Muhammad especially considering the fact that more and more traditional Yunus and described as the new kind of capitalism that profits yielding organizations are entering nonprofit territory. serves humanity’s most pressing needs. A social business is Targeted business analysis for investees and venture essentially financially self-sustainable and profits realized philanthropy must be essential part of social businesses. There by the business are reinvested in the business itself (or used is need to shun survival of operations of social enterprises on to start other social businesses), with the aim of increasing the basis of charity or conditional funds. Self-sustaining social social impact. Unlike a profit-maximizing business, the prime business and yielding returns based on models for social aim of a social business is not to maximize profits (although return on investment is a step in the right direction. While generating profits is desired). the right momentum is building, for once, Gordon Gekko, a Furthermore, business owners are not receiving any character in the 1987 film Wall Street and its 2010 sequel Wall dividend out of the business profits, if any. What is interesting Street: Money Never Sleeps, would be glad to quote, “Greed is the fact that social business is not dependent on donations has gone good.” or on private or public grants to survive and to operate. As --------------------------------------------------------------------------------- The writer is deputy director in the per Yunus’s quote, “A charity dollar has only one life; a social SECP’s Enforcement Department. A business dollar can be invested over and over again.” Social professional management accountant, entrepreneurs like Sabah Gul, CEO of the Pakistan-based Bags she holds a certificate in poverty studies for BLISS , Business and Life Skills School, are making the best from the School of African and Oriental out of it . Her company brings in Pakistani girls who are forced Studies (SOAS), London. SECP 2015 - Newsletter 7

SECP NEWS BULLETIN Outstanding Performance of the Pakistani capital market in 2014 T he year 2014 was a year of growth and exuberance for the Pakistani capital market. Throughout the year, the benchmark KSE-100 Index of the Karachi Stock Exchange Limited (KSE), exhibited outstanding performance and touched historic, unprecedented levels in terms of value and volume. According to Bloomberg, Pakistan ranked third in 2014 amongst the Top Ten Best Performing Markets in the world. Also, Pakistan has been able to secure a place amongst the Top Ten for the third consecutive year now. Moreover, in the MSCI Asian Frontier Markets, Pakistan ranked number one - outpacing Sri Lanka, Vietnam and Bangladesh by a big margin. In 2014, the KSE-100 Index gained 6,870 points thereby generating a handsome return of 27% (31% return in US$ terms). The year 2014 will also be remembered in the Pakistani capital market history for mega public offerings led by sale of shares by the Government of Pakistan, and in terms of money raised through these offerings. Total offerings in the year 2014 reached 9 as compared to 3 in the year 2013. After a gap of seven years, Rs73 billion were raised through offerings in 2014 as compared to a meager Rs4 billion raised in 2013. Higher foreign inflows during the year can also be counted as a major market impetus. Foreign investors, that hold US$6.1 billion worth of Pakistani shares - which is 33% of the free-float (9% of market capitalization) - remained net buyers in 2014. This positive performance of the capital market can be attributed to a number of favorable factors, both at the political and economic front. As enumerated above, substantial foreign investments in the equity markets which captured considerable free float of the market, declining dollar-rupee disparity and Government of Pakistan’s secondary market offerings played a major role. Other key factors which can be seen as contributing to the market’s bull-run are Government’s business friendly reforms, improved macro-economic indicators including record forex reserve levels increased confidence shown by international donor agencies, Government’s energy sector initiatives, significant interest shown by China to invest in Pakistan, and Government’s plans and initiatives towards fast-track privatization. The Chairman of SECP Zafar Hijazi feels that Pakistan’s capital market should continue its topper’s position in the new year as well, nevertheless should also qualify among the world’s most transparent and fair markets, providing the best opportunities to the investors. The incoming Chairman has already embarked on implementing a robust reforms agenda for the capital market primarily focusing on strengthening of the market monitoring and enforcement regime and introduction of structural reforms for market development and its outreach. As one of the first major steps, the Chairman has immediately doubled the human resources and infrastructure strength of Market Monitoring and Surveillance function, enhancing the scope by monitoring of capital market related discussions/programs/news on the print and electronic media including analysts’ recommendations, investing tips/strategies to their clients/general public. These preliminary actions reflect the apex regulator’s unwavering commitment towards protection of investors’ interest and rebuilding of a fair, efficient and vibrant marketplace which will continue to contribute positively towards the country’s economic growth in the years to come. SECP expedites Appellate Bench Hearings The Appellate Bench of the Securities and Exchange Commission of Pakistan (SECP) has expedited the hearing of pending appeals. The Commission is determined to reduce the pendency of appeals to zero in next two months. There were about 162 appeals pending at the Appellate Bench of the SECP. In the recent past, the process of the hearing of appeals was a bit slow at appellate bench due to shortage of Commissioners at the SECP. Following the appointment of Mr. Zafar Hijazi as Chairman SECP and Mr. Akif Saeed and Mr. Fida Huaaian Samoo as Commissioners, the Commission reached to its full strength. The Chairman SECP Mr. Zafar Hijazi has appreciated the decision of the Appellate Bench to dispose of these appeals within two months by hearing the appeals on daily basis. The two appellate benches have heard 17 cases on Thursday whereas 46 cases have been fixed for next ten days. 8 SECP 2015- Newsletter

Chairman SECP also advised launch e-Appellate Bench by the end Commissioners to give even ex-party of 2015. This will be the first electronic decision in cases where the appellants appellate forum in Pakistan. The initiative Cost-cutting Steps are not appearing before the Appellate will facilitate the corporate sector by SECP Chairman Bench despite several notices. He said enabling them to file appeals online. that the investor confidence is key to the The Appellate Bench of the SECP rationalizes development of the capital market and he is mandated to hear appeals against the has been very particular about mitigating orders passed either by a Commissioner entitlements of the investors’ difficulties through a system or any other officer authorized by the of prompt disposal of their complaints. SECP. It comprises two Commissioners. senior officers Zafar Hijazi said that the SECP would In pursuance of government’ directives to all organization to cut SECP initiates expenditures in order to reduce Examination of Prospectuses burden on the national exchequer, the Chairman, Securities and The Securities and Exchange and business reengineering. Therefore, Exchange Commission of Pakistan (SECP) Mr. Zafar Hijazi has initiated Commission of Pakistan (SECP) has drawn companies clearly state the purpose, steps to curtail perks of senior up a roadmap to review the operational benefit and utilization of the capital raised officers to ensure optimum performance and financial result over from public subscription. Moreover, the utilization of financial and human the years viz a viz the projections given forecast and projections made in the resources. in the prospectus of companies. The prospectus foretell the tale of a successful exercise is aimed-ensuring accountability business model promising substantial The cost cutting measures sponsoring directors of the companies profits and indicating attractive return in include significant reduction whose performance, in the years the form of dividend. in fuel, residential telephone, subsequent to listing, could not match In certain cases, however, in the mobile phone entitlements as the tall claims made in the prospectus. years subsequent to a successful public well as entertainment budgets of It may be noted that the subscription, the operational and financial Chairman SECP, Commissioners, requirements for disclosure of material, performances of the Company reveal Executive Directors and Directors relevant and complete information at losses and mismanagement, depriving of the SECP. It has been decided the time of issuance of prospectus is investors from reasonable return on their that the SECP officers, including already very stringent in the Companies investment. Executive Directors and Directors Ordinance, 1984 and relevant rules The accountability of directors of would only be entitled to travel in made thereunder. Any, omission and the company for prudently managing the economy class instead of economy misstatement of material facts in affairs of the Company and fulfillment of plus. prospectus attracts penal provisions their statutory responsibility towards the under the Ordinance. shareholders is the key for assessing the In addition, the Commission has Prospectus serves as the key tool performance of the Company. Therefore, further tightened the delegation for prospective investors, particularly the in addition to consistent examination of financial powers of officers. As general public, for raising capital from of annual and interim accounts, the per new directions, all budgetary the capital markets. Companies raise prospectus and allied information of expense, starting from one million substantial capital through public offer listed companies are being examined rupee and above would only be for purpose of financing their capital and comparisons drawn with the current approved by the Commission. The expenditure, aggressive expansion plans performance of such companies. overall policies relating to payroll structure, increment, bonuses and terminal benefits of employees are SECP Verifies Promoters CNICs also being rationalized. The Securities and Exchange CNIC for verification of the genuineness of Meanwhile, for better utilization Commission of Pakistan (SECP) has the applicants. of human resource, the Human started verifying the credentials of the The measure is aimed to ensure Resources Department has promoters/directors of companies authenticity of the information of the started work load assessment of through the online CNIC (Computerized promoters/directors filed during the all employees. Consequently, the National Identity Card) Verification Service incorporation of companies through employees will be rewarded and (VERISYS) of National Database and the statutory returns with the offices their services would be better Registration Authority (NADRA). of the registrars. It will also be helpful utilized in areas where they excel. This verification will be made on in countering the fraudulent activities Besides, the purpose is that the all new registrations of companies and committed through fake identity of money spent should give proper Section 42 companies. individuals who are at the helm of affairs results. This is a web-based real-time activity to run a company. displaying the front and rear image of the It will further bring in transparency SECP 2015 - Newsletter 9

and ensure validation of information, extended for validating information of besides eliminating instances of fraud sponsors of companies in the non-profit SECP approves and forgery. Not the least, it will be helpful sector while applying to the Commission in supporting the anti-terrorism efforts of for license as an association not for profit first ever the government by ensuring validity of under section 42 of the Companies identity information. Ordinance, 1984. REIT proposal The verification service will also be The Securities and Exchange SECP verified FBR data Commission of Pakistan (SECP) of compliant companies has approved a proposal for launching the first ever ‘Real Estate The Securities and Exchange It emerged that about 62% of Investment Trust (REIT)’ Scheme in Pakistan. The REIT will be managed Commission of Pakistan (SECP) has companies, out of 7,444 companies, have by Arif Habib REIT Management responded to the Federal Board of filed their annual returns with the SECP Company Limited. Revenue’s query and apprised it about in 2014. The lists of 4,641 compliant and With the advent of REIT Schemes the companies that had satisfied its 2,803 non-compliant companies have in the Pakistan the capital market compliance requirements but had not been shared with the FBR. enters into a new era where it filed tax returns with the FBR. The FBR The SECP carried out a will figure prominently among wanted to confirm their filing status with comprehensive exercise to check the regional markets. REITs are a the SECP for the year 2014. status of the said entities/companies recognized investment vehicle in The FBR had shared a list of through its online database. In a short many developed countries like 9,721 companies with the SECP. These span of 10 days, the SECP examined the USA, UK, Australia, Malaysia, Japan, companies did not e-filed income tax status of all companies provided in the etc. returns as of January 5, 2015, but had filed list. Mutual funds, Modarabas, tax returns for the tax year 2013. corporates, banks and other investors will have access to a Pakistan’s Mutual Fund Industry new asset class (REIT Units) which will enable them to diversify managing funds Worth Rs500 billion investments and manage risks. The Chairman Securities and Exchange funds, government securities funds; with The assets of the REIT Scheme will be maintained in the name Commission of Pakistan (SECP) Mr. Zafar high ethical standards. He also pointed of the Trustee and its affairs will Hijazi expressed his satisfaction that out the pressing issues faced by the be managed by a licensed REIT the mutual funds industry of Pakistan is industry including the taxation regime, Management Company. showing strong growth and successfully among others. The SECP has approved draft managing the public assets of more than The Chairman SECP said that the trust deed, business plan and Rs500 billion with a variety of investment mutual funds industry of Pakistan has conditional valuation report of vehicles including equity funds, income great potential for growth and the mutual the scheme. Earlier, the SECP had funds, money market funds, government funds association can play an important approved real estate, name and securities funds. role for development and growth of trustee of the REIT scheme. He was talking to a delegation of the industry. He highlighted that core Mutual Funds Association of Pakistan investment in mutual funds should largely (MUFAP) led by its Chairman Mr. be based on the retail investors and the A regulator Muhammad Shoaib and Senior Vice industry should play its role to inculcate a Chairman Mr. Shahid Ghaffar. culture of savings in the country. should watch The Chairman MUFAP gave a These investors can greatly benefit interests for the detailed presentation on the mutual from the expert fund management funds industry in Pakistan highlighting services offered by asset management man in street: the growth witnessed by the industry companies. He also advised the industry due to favorable investor sentiments and participants to focus on devising new Khalid Mirza excellent performance record of mutual products catering to the needs of the funds over the past years. He informed investors. He described the various that asset management industry is measures taken by the SECP for facilitating Mr. Khalid Mirza, former Chairman managing public assets of more than the industry participants and assured that of the Securities and Exchange Rs.500 billion and manages variety of the issues faced by the industry would be Commission of Pakistan (SECP), investment vehicles including equity addressed. and the Competition Commission funds, income funds, money market of Pakistan (CCP) said that all the actions and policies of a regulator should protect the interests of the man in street. He was addressing senior 10 SECP 2015- Newsletter

SECP recommends officials of the SECP. Referring to Insurance Tribunal in Islamabad the present set up of the SECP, he said that once again you have the The SECP has written to the Law and justice to the aggrieved policyholders, leadership and competence to Justice Division, recommending it to the SECP is in favor of establishing develop the SECP into one of the establish a specialized and independent independent and exclusive insurance best regulators of the developing insurance tribunal in Islamabad in tribunals as envisaged under sections 121, world. He advised officials to accordance with the provisions of the 122 and 123 of the Insurance Ordinance. perform their duties with high 2000 Insurance Ordinance to clear up the The SECP has offered to provide integrity so that no one can raise backlog of pending cases. office space to specialized tribunals at its finger on your actions. The SECP has pointed out to the law offices in Islamabad, Lahore, Peshawar, He said that only the best ministry that in 2006 with the approval of Faisalabad, Multan, Quetta and Karachi. professionals of a society deserve the chief justices of relevant High Courts, The SECP has also pointed out that to become regulators and only the federal government had conferred it has no objection to the Law and Justice regulators with a deep sense of the powers of the insurance tribunal on Division’s proposal to confer the powers of morality and integrity can adopt district and sessions judges in Karachi, the insurance tribunal on the district and the policy of naming and shaming Lahore and Peshawar. Yet due to heavy sessions judge as an interim arrangement. and bold enough not to be workload in sessions courts the SECP’s Meanwhile, the SECP has started captured by the market forces. complaints have been pending for the formulating regulations for the small He appreciated the last five years. “The desired results could dispute resolution committees. These Chairman SECP Mr Zafar Hijazi for not be achieved as no relief was provided committees will arbitrate between initiating structural reforms and to the aggrieved policyholders.” insurance companies and the taking courageous measures to Thus, in order to provide speedy policyholders. revive the SECP’s reputation. Chairman HIjazi thanked Khalid Mirza for visiting the SECP SECP approved and sharing his thoughts in the light of his varied experience. Sukuk Regulations As part of its mandate to develop the instrument of redeemable capital under SECP warns Islamic capital market and to facilitate Section 120 of the Ordinance mainly public about fund raising through Sharia Compliant through private placements. Beside financial products, the Securities and Section 120, no other specific regulatory defunct Exchange Commission of Pakistan (SECP) framework existed for structuring and has approved the Regulations for issuance issuance of Sukuk. Therefore, it had companies of Sukuk. become imperative to have a separate The Sukuk Regulations, 2015 set of regulatory framework for issuance (the Regulations) has been made of Sukuk. Major investors in Sukuk include The Securities and Exchange under Section 506A of the Companies the mutual funds, employees’ funds, Commission of Pakistan (SECP) Ordinance, 1984 (the Ordinance). The draft commercial banks both conventional has advised the public in their of the Regulations was earlier notified for and Islamic and NBFCs which directly or own interest, to be prudent while soliciting public comments thereon. indirectly hold public funds. dealing with companies whose Islamic capital market is considered The Regulations prescribe certain registration has been cancelled by as an important segment of a developed conditions to be met before issuance of the SECP. and broad-based capital market. A Sukuk and the eligibility criteria for the The SECP has issued the list developed Islamic capital market can play issuers. The Regulations in addition to the of companies, which have ceased vital role in the economic growth of a disclosure and reporting requirements to exist in the last five years. So, country. also require appointment of the Sharia they are no longer legal entities. Currently Sukuk are issued as an Advisor and Investment Agent. Sharia. These companies were struck off either on their own SECP organizes choice by availing themselves of Company Easy Exit Scheme Investor Awareness Seminars (CEES)/voluntary wind-up, or their registration have been cancelled The Securities and Exchange with engaging presentations and a lively by the Registrar due to their non- Commission of Pakistan (SECP) to Q&A session. It was part of the SECP’s operational/dormant status. further its endeavor of protecting retail overall investor education program, The said list, which contains investors, raising awareness about which is aimed at enhancing financial over 6,000 companies, may be savings and investment and building literacy and providing easy access to viewed on the SECP’s website at investor confidence, organized awareness financial instruments through setting up http://www.secp.gov.pk/CLD/cld_ seminars in Lahore, Karachi and Islamabad. of capital market hubs across major cities ceased_companies.asp. The seminars were well-attended, of Pakistan. SECP 2015 - Newsletter 11

The seminars were designed to enlighten savings vehicles and initiatives taken by the participants about capital markets, the SECP to safeguard investor interests. SECP amends mutual and pension funds as investment/ regulatory SECP adopts Stringent framework for Measures for Market Surveillance NBFCs The Securities and Exchange Commission but monitoring of the entire spectrum, In continuation of the numerous of Pakistan (SECP) has strengthened its including observing company steps taken to improve the monitoring and surveillance of trading announcements, index movements, financial sector and to restore activity at the exchanges and restructured media reports, rumors and speculation. the confidence of the investors, and reinforced its Market Surveillance and All of this strengthens the SECP’s position the SECP under the leadership Special Initiatives Department. as a robust regulator and further instills of Mr. Zafar Hijazi has approved Stringent measures will be adopted confidence within the capital markets. substantial amendments to the to ensure integrity and fairness in the This emphasis on the protection regulatory framework for the non- trading activity and to identify abusive, of investors’ interests and curtailing bank financial (NBF) sector inviting manipulative and irregular trading market abuse has resulted in 30 actions public’s comments. practices. With additional resources in this year. This represents over 50% of the The idea is to improve access place, the department now consists of entire actions taken the previous year to finance and promoting a culture three separate wings, i.e. the Market and almost equals the total number of of savings and investment, leading Surveillance Wing, the Market Watch and actions taken the year before. In this to increase in the participation Development Wing and the Media and regard, 9 actions have been taken on of retail investors in the capital Research Wing. insider trading/front running, 2 orders markets. The SECP intends to This reorganization of Market have been passed under Section 22 of the promote housing finance and Surveillance department has enhanced 1969 Securities and Exchange Ordinance enable NBFIs to play a key role the SECP’s capacity and effectiveness (SEO), 4 prohibitory orders under the SEO in the development of formal for monitoring and surveillance of have been issued, along with 15 warning housing finance sector. Pakistan’s capital markets, not just letters to market participants. The proposed regulatory through monitoring trading activity framework has also strengthened the fit and proper criteria for the promoters and majority SECP establishes shareholders of the NBFIs to ensure that the best suitable people are at Islamic Finance Department the helm of affairs of the NBFIs. A balance has been struck between As part of its initiative to promote and changes to the 1962 Banking Companies the inherent risk in the operating structure of the NBFIs and the develop the Islamic financial market, the Ordinance and the promulgation of level of regulatory oversight and Securities and Exchange Commission of the 1980 Modaraba Companies and conditions imposed upon them. Pakistan (SECP) has established an Islamic Modaraba (Floatation and Control) In order to ensure the Finance Department. The department Ordinance. Modarabas are the pioneering management of NBFIs in line is mandated to carry out the functions Islamic financial institutions in Pakistan with the best practices, board of of Shariah regulation and compliance, followed by the Islamic banks, takaful, directors has been empowered product development, market awareness, Islamic mutual funds and Islamic pension to take ownership and act Shariah securities market development funds. proactively. Moreover, to create and international liaison and networking. specialization and focus on their The SECP is entrusted with operations, the NBFCs are also regulating a spectrum of Shariah- being categorized as lending oriented companies, ranging from NFBCs, fund management NBFCs modarabas, non-banking finance, takaful and advisory NBFCs. and non-financial companies. The The drafts of the proposed Islamic Finance Department will act as At present the total Islamic financial regulatory framework have been a backbone for coordination between assets of Pakistan have reached over placed on the SECP’s website. the SECP’s operational departments with Rs1.7 trillion, constituting around 10% Comments from the public and the primary objective of regulating and of the total banking assets. Out of the other stakeholders in this regard promoting Islamic finance and Shariah total Islamic financial assets around 40% have been sought by March 19, compliance in the capital market. assets are directly or indirectly regulated 2015. by the SECP. They include mutual funds, In the late 1970s the government of modarabas, pension funds, takaful and Pakistan took an initiative towards sukuk. eliminating riba by introducing some 12 SECP 2015- Newsletter

ISOCO WEBINAR I OSCO Asia Pacific Regional coordination with SDER organized on market intermediaries’ risk- T&OD in Accordingly, Committee (APRC) Chair, the Hong supervision programs based Kong SFC, as part of our regional a webinar on behalf of IOSCO APRC and shared his expertise and capacity building initiative, had invited the SECP to participate in on “risk-based supervision” on experiences in this area. The program covered intermediaries November 10, 2014. Participants the inaugural 2014 APRC webinar on from within the SECP in Karachi such as brokers, fund managers risk-based supervision. This was the and Islamabad participated in the and financial planners. Further, first time that the APRC, and possibly webinar. there was a Q&A session during IOSCO, was using technology Mr. Stephen Po, Chair of 10SCO the last 30 minutes of the webinar, to stream real time training Committee 3 on the Regulation where Mr. Salman Hayat, AD, SDER, presentations over the Internet to of Market Intermediaries and typed in views and questions and connect with the members. head of the Hong Kong SFC’s the presenter responded verbally Intermediaries Supervision via live streaming. Department, made a presentation Corporate governance enforcement workshop with IFC In coordination with the (IFC). The event via video group was for IFC to assess through Chairman’s Secretariat, Training conferencing connected our interaction with the relevant and Organizational Development internal audiences from Lahore, stakeholders, the need for training Wing facilitated a focus Karachi and Islamabad and in corporate governance and how group discussion conducted relevant participants of the stock it may fund specific trainings in by representatives of the exchanges. this regard to help the SECP and International Finance Corporation The objective of this focus market intermediaries. SECP 2015 - Newsletter 13

SECP EMPLOYEES ADOPTS A RESOLUTION AND MAKES A COMMITMENT I n continuation of the deserve to occupy this position. and corruption. They pledged Pakistan Day celebrations Mr Zafar Hijazi said this to maintain secrecy of official across observed being day demands that we renew information and that nobody the country, the Securities and Exchange Commission our resolve to work harder would let external pressure or personal relationship affect their for the development of our of Pakistan (SECP) also motherland. work in any way. organized an event to Hence a resolution was They also resolved that celebrate the occasion. adopted with consensus they would perform their duties in which the employees to the best of their ability to Addressing the gathering, and officers expressed make the SECP an effective Chairman SECP Mr Zafar Hijazi their determination that as organization which plays its full said one way of expressing regulators they will perform role in the economic progress of gratitude to God for blessing their responsibilities honestly, the country. us with Pakistan is to make a efficiently and with full vigour in commitment that we all work the interest of the country and with utmost integrity. the organization. He asked the employees All the SECP employees to be conscious of the fact that further resolved to make the they are the regulators and only SECP an exemplary organization the best persons of a society by keeping it free of bribery 14 SECP 2015- Newsletter

SECP 2015 - Newsletter 15

SECOND SECP TABLE TENNIS TOURNAMENT T he Training and Development (T&OD) Department of Organizational organized the second SECP Table Tennis Tournament 2014 in the months of November and December 2014 at the SECP’s head office. The objective behind organizing this tournament was to encourage healthy activities among employees and to provide employees with the opportunity to interact with each other in a casual and friendly environment. There was healthy participation in a competitive yet jovial atmosphere. At the grand finale of the tournament, Mr. Zafar Abdullah, the then Commissioner, SSD and SMD, graced the prize distribution ceremony and appreciated all the participants for their enthusiasm. He also emphasized the importance of conducting such events periodically to encourage health and fitness and interdepartmental networking at the SECP. ThE fOllOwING PlayERS PaRTIcIPaTED IN ThE TOuRNamENT mEN’S SINGlES caTEGORy: Awais Ali, Mirza Arif Baig, Muhammad Younas, Imran Khan Baloch, Kamal Ali, Muhammad Asad Saeed, Shakil Chaudhary, Khurram Hasan, Hammad Ahmed, Haroon Rashid, Imran Saeed, Imran Hussain Minhas, Muhammad Afzal, Omer Gulzar, Rizwan Haroon, Usman Ahmad Malik, Talha Monis, Akif Saeed, Khawaja Ammad Masud mEN’S DOublE’S caTEGORy: Awais Ali and Mirza Arif Baig, Imran Khan Baloch and Muhammad Younas, Kamal Ali and Muhammad Assad Saeed, Umar Yahya and Khawaja Ammad Masud, Haroon Rashid and Imran Saeed, Imran Hussain Minhas and Muhammad Afzal, Muhammad Azim and Hammad Ahmad, Talha Monis and Usman Ahmad Malik, Rizwan Haroon and Junaid Tariq, Aoun Abbas Zaidi and Khurram Shahzad, Arslan and Mirza Shoaib Baig. wOmEN’S SINGlES caTEGORy: Nazish zubair, Kashfa MahMood 16 SECP 2015- Newsletter

Champions and Runners-up Champions Champions Men’s Singles Khurram Hassan Champions Women’s Singles Nazish Zubair Runners-up Men’s Runners-up Awais Ali Women’s Runners-up Kashfa Mahmood Champions Champions Men’s Double Awais Ali & Arif Baig Runners-up Runners-up Men’s Singles Kamal Ali & Khurram Hassan SECP 2015 - Newsletter 17

DUA FOR THE MARTYRS On December 17, 2014 all the SECP’s employees gathered in the NIC Auditorium in Islamabad and prayed for the souls of deceased. Mourners Army Public School, Peshawar O n December 16, 2014, the Public Army School in Peshawar was subjected a gruesome terrorist attack, killing 145 people, including 132 schoolchildren. The heart-rending tragedy plunged the entire nation into a state of mourning and sadness. Orientation the request to fulfil its duty as a contributed immensely to the The event arranged by T&OD The SECP gladly accepted Session responsible corporate citizen, exposure of the visiting students because the UST is located in an who interacted openly with the representatives senior SECP’s area stricken by terrorism and T he SECP received a request from poverty, which borders North of various departments, who Waziristan. There is neither vibrant specially found time to formally the Bannu-based University of industry in its surroundings nor present an overview of their Science and Technology (UST) to organize an interactive orientation event was held on December 15, that could provide its students session for their students at the SECP any renowned financial institution departments’ operations. The headquarters. the opportunity to see the world 2014, at the training room on of practice through the lens of the third floor. It was followed by theoretical knowledge. lunch for the visitors. 18 SECP 2015- Newsletter

In-house workshop on ‘The Finer Points of Professionalism’ The T&OD Wing in the past had organized training programs on staff etiquette, personal hygiene and professional decorum for non-clerical staff of the SECP in Karachi, Lahore and in Islamabad. Following the success of these workshops, and upon numerous requests from various departments, T&OD proceeded to develop an advanced version of this workshop relevant to the SECP’s management cadre employees and rolled out its first workshop on this topic on December 2, 2014. This session too received highly positive feedback. The objectives of these training Participants benefited from the sessions were as follows. In this 3 hour workshop by learning about: session, participants learnt unique and interesting facts about: • Further improve their interpersonal communication • Claud Shannon and Warren • Dress with more confidence in Weaver’s world renowned “WOVEN” making a presentable appearance and its relevance to professional on a day to day basis and on special communication occasions such as conferences and • International and domestic meetings professional attire requirements for • Learn about international and local gentlemen and fine dining etiquette for better self- • Continental, American, Asian and management during professional subcontinental fine dining etiquette luncheons and dinners. SECP 2015 - Newsletter 19

SECP’s initiatives for paperless environment Shane Coelho A paperless environment compared to a paper-based environment leads to greater operational efficiency, rising profitability and increased customer satisfaction. As digital technologies evolve with advanced capabilities, they have proven to be more cost-effective. In order to achieve improvement in regulatory compliance, eliminating loads of paperwork has been one of the key objectives of every modern regulator. Since its inception in 2008, the e-Services project has been evolving. In fact, it has • improving the quality of data undergone significant transformation. The Securities and Exchange Commission management being more analytical of Pakistan (SECP) is continuously rethinking the governance standards to and informative establish a unified platform for filing, retrieval and dissemination of information of • reduced fee structure in contrast to statutory returns, including quarterly, half yearly and annual accounts submitted physical filing of documents and by the registered corporate entities. • secured data storage The project which was initially fashioned with a basic framework for online The companies registered under incorporation of companies and filing of statutory returns has now progressively the 1984 Companies Ordinance have advanced in technology. Effective September 2014, vide S.R.O. 593(I)/2014, the exhibited a receptive attitude towards SECP has implemented the mandatory submission of documents through e-filing the various policies implemented by by various companies registered entities under the 1984 Companies Ordinance. the SECP. As a consequence of the The requirement of mandatory online filing now extends to categories such as new requirement, during the October- public companies (listed and unlisted), private/single member companies having November period a phenomenal surge paid-up capital of Rs50 million or more, all non-profit organizations registered of documents (returns/accounts) were under Section 42 and trade bodies, etc. Through the said statutory regulatory submitted through e-filing. order, it has now become mandatory for all of the above categories of companies By creating a decisive and to submit documents, returns, accounts and applications online through the integrated electronic linkage will surely eServices portal. go a long way towards complementing the efforts taken by the SECP in its quest Being compatible with its intended user’s ability to use it easily and to achieve its primary mission to develop successfully, the advantages of the requirement for mandatory online a robust regulatory system, which is filing are manifold: imperative for the development of the corporate sector and ultimately for the • providing solutions that will help companies, organizations, SOEs, growth of national economy. institutions to achieve better operational efficiency bringing them at par with international best practices • increasing the regulatory compliance • enhancing efficiency in delivery of services 20 SECP 2015- Newsletter

Riba, the major driving force and key held responsible. It is true that the set of rules to run the social, political element in the conventional banking, modern economies cannot survive and economic system. The subject is one of those items which have been without a sound financial system, but it of Islamic economics, banking and strictly forbidden and declared haram is not necessary that it should be based finance is covered under the muamulat. (forbidden) in Islam. The convention on conventional banking practices Ijma and qiyas are the methodologies banking and finance system is not and riba. A modern Shariah-compliant being used by the Shariah scholars to meant for the Muslims. Practicing riba- solution of conventional financial provide Shariah-compliant solutions to based banking and financial system is system is no longer a pipe dream. the financial problems of the modern sinful and destructive for the Muslims Islam is a complete code of life, age. It is believed that the creation of for which primarily the state shall be and it has laid down comprehensive this world is based on goodness and Insights on Islamic finance Imran Hussain Minhas utility; and like Islam, every religion for the Muslim societies. • Business activity must be halal has goodness and utility as its basic Islamic banking and finance (permitted) no funding to haram principles. Being Muslims we believe model is based on economic justice or sinful activities. that whatever is declared haram by and is free from the element of riba, Allah, has no utility for the people in gharar, mysir, and support from In the current situation the this world and the hereafter. And the haram business activities. In fact, Islamic banking has proven to be a one, who follows the forbidden path, the prohibition to engage in such suitable alternative, which has been generates the curse of sins much transactions that extract surplus value accepted worldwide. Today, there greater than the utility he receives. in an unfair way with the elements of are more than 600 Islamic financial In order to address and eliminate riba and gharar stems from concerns institutions, including government- riba from banking and financial of justice and fairness. For a financial run banks, private banks, investment system, Islamic jurists have introduced or business transaction to be viable companies, mutual funds, takaful the Islamic banking and finance economically and ethically, Shariah companies and modarabas operating (IBF) system, which encourages measures may include the following in more than 75 countries. As of 2014 entrepreneurship, trade and profits principles: the total assets of around $2 trillion by discouraging riba. The IBF is the are Sharia-compliant (The Economist). value system which is governed by • Risk-sharing– The parties involved According to Ernst & Young, from 2009 the principles and rules established in a financial transaction must to 2013 the Islamic banking assets by the Quran and Sunnah. In addition share the risk of loss of the business have grown at an annual rate of 17.6% to the conventional good governance transaction as well. and they are expected to grow by an and risk management rules, it operates • Materiality– The financial transac- average of 19.7% a year to 2018. to implement and materialize the tion must be linked to a real economic and financial ideology economic transaction; History of Islamic finance of Shariah. The IBF is allowed and • No exploitation– a financial tran- approved by the Islamic jurists as a riba- saction should be exploitation History of Islamic finance is as old as free and Shariah-compliant alternative free; and the Islam is. Some of the products such as modaraba and musharakah are SECP 2015 - Newsletter 21

being practiced before the era of the on Shariah principles. on the subject of interest-free banking last Prophet (PBUH). In addition, salam In the 20th century, Islamic scholars was conducted in 1955 onwards. also has endorsement of Muslims since perceived‘necessary evil’, and However, the basis of the time of Holy Prophet (PBUH). proposed a banking system based modern Islamic banking and finance on the concept of mudaraba. In were provided by the first Shariah- An early form of Islamic the 1920 the ruler of Bahrain asked compliant savings bank, which was capitalism was developed between the Eastern Bank, the predecessor established in the Nile Delta town of the 8th and 12th centuries and the Standard Chartered, that they can Mit Ghamr, a rural area of the Egypt economy of the period was based on only open a branch on the island if it by an economist Ahmad Al Najjar in currency in the form of gold dinar and offers interest free transactions. At the 1963 as Mit Ghamr Savings Project. many forms and concepts of Islamic same time the National Handelsbank The idea was not advertised for fear enterprises apart from the state were of the Netherlands, the predecessor of being seen as a manifestation of also adopted. During the Ottoman rule, of ABN-Amro was allowed to provide Islamic fundamentalism during the the Middle Eastern traders practiced interest free money changing services Jamal Nasser regime. The Mit Ghamr financial transactions that were based in Jeddah to pilgrims. Specific work Savings Project was shut down by the In the 20th century, Islamic scholars proposed a banking system government in 1968. journey, through presidential orders, framework under the Modaraba Later, in 1971, it was merged with and the 1980 Modaraba Companies Ordinance was not declared un-Islamic. the Nasser Social Bank. The bank failed and Modaraba (Floatation and Control) Against the order of the FSC, a request but the idea succeeded. Soon after the Ordinance was promulgated which was made in the Shariat Appellate experience, many commercial banks in enabled business groups to set up SME Bench (SAB) of the Supreme Court to Egypt started following Mit Ghamr. The modarabas. It was a great breakthrough, review the order. wave of modern Islamic banking also which enable people to establish full On December 23, 1999, i.e. after eight started in other parts of the world. In fledge Islamic financial institutions years, the Supreme Court rejected the 1963 Malaysia introduced the Malaysian under the Modaraba Ordinance. appeal by declaring the efforts towards Pilgrims Fund Board (Tabung Haji) as a The specialized financial institutions Islamic banking un-Islamic and that first Islamic investment fund. Islamic such as the House Building Finance the interest-based system shall cease Development Bank, with its head office Corporation, National Investment to have effect by June 30, 2001. The in Jeddah, was also established in July Trust and Investment Corporation of Supreme Court gave its decision that 1975 to foster economic development Pakistan transformed their operations currently interest-based system would and social progress of member in conformity with the Shariah in July be shifted according to the principles countries individually as well as jointly 1979. of Shariah, as soon as possible. in accordance with the principles of The conventional banking In 2001, on the appeal of United Shariah. The first modern commercial converted into profit and loss sharing Bank, the SAB extended its earlier Islamic bank, Dubai Islamic Bank, also banking by making amendments deadline to June 30, 2002. started its operations in 1975. Islamic to the 1962 Banking Companies On June 24, 2002 the SAB Bank, also started its operations in 1975. Ordinance (BCO) and on January 1, reversed its own decision of 1999 and At the same time Pakistan achieved 1981, interest-free counters were remanded the case back to the FSC for fourth position in the globe to established in all the public and one re-determination. implement riba-free financial system foreign bank operating in Pakistan and In the meantime, the in the country by taking the following their interest bearing deposits were Government of Pakistan (GoP) formed steps: converted into profit and loss sharing a Commission for Transformation The Council of Islamic Ideology deposits. But foreign currency deposit of Financial System (CTFS) under (CII) set up a panel of bankers and and debts remained on conventional the supervision of the State Bank economists on September 29, 1977, interest bearing system. of Pakistan. The CTFS submitted its which prepared the blueprint for In November 1991, the Federal final recommendations in August interest-free economic system and Shariat Court (FSC) declared that the 2001, for creating a legal Shariah- submitted its report in February 1980, system of profit and loss sharing compliant infrastructure for shifting of highlighting ways of eliminating adopted in the banking sector was the economy and conversion of the interest from economy. not in accordance with the teachings entire financial systems in accordance The Islamic finance started its of Islam. However, the regulatory with Shariah and interest free system 22 SECP 2015- Newsletter

in a phased manner without causing 1. In January 2002 first Islamic bank of financial system, banking and any disruptions to the economy and of Pakistan got license and now capital markets of Pakistan. banking system. Separate Islamic banks there are five full-fledged Islamic ------------------------------------------------------------- were allowed to operate in parallel to Banks and 15 conventional banks The writer is a joint director in the conventional banks. In addition, the are offering Islamic banking Islamic Finance Department. He earned his master’s in commerce from Punjab following three institutional options services through their window University. He were provided: or dedicated branch networks. has also obtained In 2014 the total assets of Islamic several certifications • Setting up an independent and banking and finance of Pakistan from the United dedicated Islamic bank have reached to over Rs1.5 trillion Nations Institute • Setting up an Islamic banking with the major share of Islamic of Training and subsidiary of a conventional bank banking which is over Rs1 trillion. Research, Geneva. • Setting up dedicated Islamic 2. Recently, in 2013 the GOP has The views expressed banking branches of a formed a ‘Steering Committee for here are those of the author, and do not necessarily reflect those of the SECP. conventional bank promotion of Islamic Banking’ to speed up work on Islamization SECP 2015 - Newsletter 23

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN NIC Building, 63 Jinnah Avenue, Blue Area, Islamabad 44000, Pakistan www.secp.gov.pk