Capital market reform measures have improved investor participation by allowing ease of entry into the market, said a Annual Report issued here by Security and Exchange Commission of Pakistan.
In this regard, not only domestic but foreign investors and NRPs have also shown more interest in investing in our capital market.
According to the annual report,owing to facility of online account opening process for NRPs, approximately Rs2.589 billion funds have been received for investment in securities as of June 30, 2021.
Further, the online account opening facility introduced in January 2021 has resulted in opening of more than 10,500 accounts through this facility, which forms approximately 38% of total new UINs registered during the period, report added.
Measures undertaken in response to the COVID-19 pandemic also resulted in seamless market operations without any disruption. Securities brokers retained uninterrupted access to the market while investors continued to open their accounts from across the country.
Report said that for implementation of new brokerage regime, introduction of Professional Clearing Member model is imperative. Subsequent to provision of regulatory coverage, license has been issued to a company to function as PCM which has set the stage for finalizing and introducing brokers categorization, thus paving the way for enhanced investor protection.
Further, corporate governance of PSX has been enhanced which shall improve operational efficiency and functioning of PSX in the capital market. Other corporate governance measures have resulted in removing over-regulation and rationalizing educational qualification and experience requirements for senior management officials of SROs. In addition, reform measures foster investor confidence in our capital market resulting in increased investor participation. Also, investors are facilitated to easily attend AGMs when
AGMs are scheduled through PSX AGM Calendar and by encouraging companies to provide electronic modes for shareholders to attend AGMs, report added.
To perform ongoing risk analysis, SECP has a dedicated Systemic Risk Wing to monitor cross segment systemic risk indicators, macroeconomic and political developments, structural and regulatory matters affecting the markets. The SRW interacts internally through the systemic risk review committee (SRRC), and coordinates SECP’s efforts at the national level through the National Financial Stability Council.
The SECP also coordinates with SBP on micro and macro level risk management and conducted various sessions during the year to get an insight on risk protocols implemented in SBP. The initiative is aimed at increasing inter-agency collaboration and capacity enhancement, to improve risk functions and protocols of the SECP.
During FY 21, the markets remained relatively stable, as evident from the performance of benchmark Index, which improved during the year. This can be mainly attributed to higher returns, lower volatility and increased liquidity, as compared to FY20.
Monitoring and generating reports on daily and fortnightly basis, for medium to long term analysis of capital market vis-Ã -vis macroeconomic indicators.
During the year, a scenario analysis carried out in collaboration with NCCPL, to gauge the resilience of the market in case of a sharp decline within short time span. It was observed that, even after increasing the margin requirements significantly, the existing collateral levels were found to be sufficient in meeting the additional margin requirements, which suggests that the existing regime is covering market volatility efficiently.
An in-house model developed by SECP and NCCPL conducts forward looking stress and reverse tests on daily basis, to give an insight on resilience of margins, settlement guarantee fund and other resources of clearing house. The results indicate that there are ample risk management protocols in place to handle any crisis in the capital market.
