Finance Minister launches “EMLAAK Financials”, Pakistan’s first digital Mutual Fund aggregator developed by CDC

As a landmark and first of its kind initiative in Pakistan’s capital market landscape, “Emlaak Financials” the first digital aggregator platform for mutual funds has been formally inaugurated by the Honorable Federal Minister for Finance & Revenue, Dr. Miftah Ismail on Aug 5, 2022 at CDC House, Karachi. This platform has been successfully implemented as a digital distribution channel initially for Mutual Funds and later on for other asset classes also.

The Pilot project for Emlaak was initially launched in 2021 for the Sahulat account opening via the platform, after which CDC has continued to abide by its commitment to collaborate with the Mutual Fund Industry for enhancing the platform. The full-fledged account opening feature has now been launched via this online investment portal which is the first of its kind in Pakistan allowing multiple funds from different AMCs to be offered to investors through a single platform.

While officiating the event, Honorable Federal Minister for Finance & Revenue Dr. Miftah Ismail said, “Emlaak Financials, which has been implemented as a digital aggregator of Mutual Funds, is a very important and timely initiative by SECP and very well executed by CDC. It is very important for our economy that we should introduce such novel concepts which will promote the investment culture in Pakistan and provide an easy and informative platform to the investors thus enabling them to make wise investment decisions while giving them the convenience to open their mutual fund accounts digitally from anywhere without having to visit the brick & mortar offices of Asset Management Companies.”

While addressing the occasion, Mr. Aamir Khan—Chairman SECP said, “It is indeed a very important milestone for the Mutual Fund Industry as it embarks on this consolidated digital distribution channel launched for the first time in Pakistan. We, at SECP, are strong proponents of re-engineering processes for promoting efficiency and transparency through digitalization and will continue to support and encourage all such initiatives by providing all the required Regulatory assistance in this regard.

Mr. Moin Fudda, Chairman of CDC’s Board of Directors, welcomed the Finance Minister and others guests after which CEO MUFAP Ms. Mashmooma Majeed addressed the audience. At the occasion, describing the objectives of the platform, Mr. Badiuddin Akber—CEO CDC said, “Emlaak Financials has been envisioned to pave the way for the growth of the Mutual Fund Industry and promote the savings culture in Pakistan at the grass-root level. CDC is committed towards providing innovative tech-based platforms to Capital Market entities through which they can leverage CDC’s technological edge to enhance their investor outreach in a convenient, informative and interactive manner.”

The event was also attended by Director SECP – Ms. Khalda Habib, representatives of the Asset Management Industry and other Industry representatives, who lauded CDC’s efforts in undertaking this initiative and playing its role for the development of the mutual fund industry.

SECP expands investment opportunities for Income Funds

ISLAMABAD, June 13: In a major move to provide ease of doing business and expand investment avenues for mutual funds, the Securities and Exchange commission of Pakistan (SECP) has allowed mutual/income funds to invest in “A” or above rated banks.

This permission will substantially expand the range of banks, where the income funds can make deposits, thus enabling funds to negotiate better returns for their unit holders.

It is pertinent to mention here that the ‘A’ category banks are categorized as ‘Stable’ by the State Bank of Pakistan (SBP). Earlier, the mutual/income funds could only make investments in A+ rated banks and Development Finance Institutions (DFIs).

Currently, the accumulated assets of the mutual fund sector is Rs1.2 trillion, out of which around Rs300 billion is invested in Income Funds whereas Rs561 billion is invested in the Money Market Funds. By bridging the gap between Income Funds and other income/savings products with similar risk profile, the funds industry will be able to tap more into the potential Rs12.5 trillion savings and fixed deposits, currently held by banks.

Governor State Bank visits CDC to further strengthen SBP’s commitment to the development of Pakistan Capital Market

Governor State Bank Dr. Reza Baqir visited CDC House to mark the successful operationalization of important projects for Pakistan Capital Market, namely Roshan Equity and RAAST for Dividend payments, which have been implemented in the recent past by the State Bank in collaboration with the Capital Market and commercial banks.

It is indeed a moment to celebrate for CDC and the entire Capital Market as the successful roll-outs of these key projects of market development have started yielding promising results besides effecting ease of doing business through innovative solutions, digitization and efficiency of processes.

Speaking at the occasion Governor State Bank Dr. Reza Baqir, said, “This is an occasion of immense and significant achievement as we gather here to celebrate the successful roll-out of important projects of national interest—including Roshan Equity and RAAST—that have been initiated by the State Bank of Pakistan and very well executed by commercial banks and CDC. In all these projects, Central Depository of Pakistan has been playing the important roles of facilitator, infrastructure architect and information sharing hub. This is only the beginning of what our vision is for the development of Pakistan’s Capital market. SBP is committed to work with SECP to support Capital market entities in this regard. Now, we have initiated a new project for the Capital Market pertaining to Shared KYC through which investors can open Capital Market Account through their respective Bank’s portal/app. This project will pave the way for wider outreach for our Capital Market.”

Mr. Badiuddin Akber CEO-CDC thanked SBP and SECP for their continued support and patronage in achieving these milestone in its market transformation journey. CDC is already processing thousands of transactions related to Roshan Digital Accounts and RAAST for Stock Exchange, for which CDC acts as the information sharing hub between the banks and capital market entities. Now, for the “Shared KYC project”, CDC will again act as the Information Sharing bridge for the digital opening of capital market accounts through banking portals for Local Resident Investors with the objective of removing duplication of information capture and KYC processes, he further said.

At the start of the ceremony, Mr. Moin Fudda Chairman Board of Directors-CDC, welcomed Dr. Baqir and other guests to CDC and highlighted the achievements of SBP under the leadership of Dr. Baqir. Mr. Furrukh Khan MD-PSX also addressed the ceremony and stressed on the important role of SBP in the development of Pakistan Stock Market. Ms. Musrat Jabeen Executive Director-SECP focused on the significance of collaboration between SBP and SECP.

Prominent personalities from the banking sector and Pakistan Capital Market also attended the event.

SECP leads by example in Corporate Governance, Enterprise Risk Management and Sustainable Development: Aamir Khan

“SECP, as the regulator of not just the corporate sector, but also the capital markets, NBFCs and insurance sector, is passionate about implementing a comprehensive and robust code of corporate governance in Pakistan, being equally focused on promoting effective management, improving transparency, and fostering healthy competition,” said SECP Chairman Aamir Khan in his keynote address at Management Association of Pakistan (MAP) Convention 2022 ‘Leadership & Governance in Changing Times’.

He informed that the SECP introduced first Code of Corporate Governance in 2002 and for the first time in Pakistan’s corporate history, brought to the forefront issues related to conflict of interest, concept of independent director, and duties & responsibilities of directors. Over the next decade, Pakistan’s local markets also opened up to international investors and in 2012, the receptive attitude of the market players helped activate reforms in the Code. “This, ushered new provisions related to rights of minority shareholders, corporate social responsibility, and gender diversity to the Code,” he said.

In 2019, the code was amended one again, following the global shift from a “rule based” approach to a “comply or explain” method. Here, the “one-size-fits all” approach was swapped in favour of a customized model, which allowed companies the liberty to explain the impediments in complying with non-mandatory clauses of the Code.

The chairman said that this was also in line with SECP’s objectives of promoting efficient corporate governance outcomes, by acknowledging the specific characteristics of companies in tailoring governance norms. “And in the process allowing freedom to their boards to set their own priorities within a structured parameter”.

SECP also made numerous governance related reforms within the organization aimed at improving transparency, and ensuring effectiveness and efficiency of decision making across various functions, by moving to a function-based structure instead of a sector-based model, informed SECP Chairman. More and more powers have been delegated to the management, while the Commissioners have started focusing more on oversight and policy instead of day-to-day management. Similarly, enforcement activity has also been revamped by separating adjudication, supervision and litigation functions. There by improving transparency and a systematic process of checks and balances.

Speaking on the importance of Enterprise Risk Management (ERM), Aamir Khan said that companies must gravitate towards an integrated, interactive, enterprise-wide approach that assesses and manages all risks taken together. “Integrating ERM directly to the governance strategy facilitates the management to identify, analyze, and control risks inherent in their business strategy,” he said.

He added that existence of an ERM framework also sends a strong signal to the market, and helps improve investor confidence. International investors, in particular, assess how companies have taken appropriate measures to improve their risk management systems.

SECP Chairman also spoke about the significance of ESG, not just in governing SECP’s approach in regulations but also for the corporate sector in ensuring sustainability in financial reporting, ethical investing, and socially responsible business practices.

Keeping this into consideration, SECP introduced the Guidelines for Corporate Social Responsibility in 2013, serving as a base for company’s responsibility towards the community and environment. SECP, through its corporate governance regime, directly caters to the ESG impact indicators, in particular, “inclusive and diverse boards”, while the companies are also required to have an ESG policy covering health, safety and responsible investment aspects, as part of their business strategy.

Recently, guidelines have also been introduced for issuance of green bonds in Pakistan, facilitating issuers of debt securities to diversify their source of financing by initiating sustainable projects for combating climate change, and serving as a viable option to environmentally conscious investors.

On its part, SECP has been able to reduce use of stationary items by 55% directly as a result of digitization of internal workflows and processes in the last financial year. This reduction of paper usage roughly translates into saving 38 trees, just in a span of one year.

SECP has also initiated a dialogue with stakeholders and is working on an ESG regulatory roadmap, serving as an action plan for making meaningful progress within the next few years.

He said that companies need to be treated as going concerns because their impact goes beyond products and services they offer, they provide employment and directly affect the communities they operate in. “We should aim to ‘build to last’ rather than ‘build to benefit’”, said SECP Chairman.

SECP specifies eligibility requirement to register as trustee of open-end or close-end scheme

ISLAMABAD: Pursuing its agenda of developing vibrant and competitive capital markets, the Securities and Exchange Commission of Pakistan (SECP) has specified the eligibility criteria and enabling framework to register as a trustee of open-end or close-end schemes.

Under the framework, notified through Circular No 4 of 2022, a public limited company having principal business of providing trustee services to Collective Investment Schemes (CIS), Pension Funds, REIT Schemes and Private Funds, is eligible for registration. The minimum equity requirement for eligibility it set at Rs100 million or 0.10% of the net assets under its trusteeship, whichever is higher.

The trustee registration will strengthen the fund management sector, bring more transparency, increase digitalization and promote a healthy corporate culture.

One of the main requirements of eligibility for registration as trustee is to have at least one financial institution or an insurer with a net equity of at least Rs. 1 billion, as a major shareholder. It is further specified that the directors, chief executive and major shareholders shall comply with Fit and Proper Criteria and shall be subject to prior approval of the SECP. Listed Companies Code of Corporate Governance will also be applicable on the trustee company.

SECP introduces “Online Only Brokers” concept to expand market outreach

ISLAMABAD, February 22: In light of its vision to expand market outreach and promote digitalization of financial services, the Securities and Exchange Commission of Pakistan (SECP) has introduced the concept of Online Only Brokers.

The new class of Online Only brokers aims to encourage new participants to commence brokerage business with minimal preliminary infrastructure and operational costs by using electronic means only. Under the new regime, the account opening process will be conducted online as per the digital onboarding framework approved by the SECP and the Online Only brokers will be able to provide trading services to its customers, exclusively through online modes.

This regime is in line with international best practices to offer a complete digital experience to investors who will have the convenience to trade in the stock market and make investments and divestments decisions without having to physically visit a brokerage office or branch.

An Online Only Broker shall be eligible to operate as a Single Member Company with minimum net worth requirement of PKR 7.5 million only. To facilitate new entrants, the SECP has proposed rationalized license issuance and renewal fees at PKR 50,000 and PKR 25,000 respectively. Pakistan Stock Exchange shall also issue the Trading Right Entitlement Certificate to Online-only brokers at significantly reduced rates along with minimal documentation requirements. Moreover, existing brokers may also switch to this new category to lower their overhead costs and to remain focused on the core business of trading.

The Online Only Broker will operate as a sub-category of Trading Only (TO) Brokers – a class of brokers authorized to conduct trading only and the Professional Clearing Member or Trading and Clearing Brokers execute the trades and also keep custody of securities or money owned by the customers of TO Brokers. In a bid to curb any conflict of interest, the Online Only Brokers shall not be allowed to undertake proprietary trading, however, they may provide securities advisory services to their customers subject to compliance with the requirements of Securities and Futures Advisers (Licensing and Operations) Regulations, 2017.

The proposal of Online Only Broker, coupled with the recently introduced concept of Account Facilitation/Customer Help Centres, are aimed to enhance commercial viability of brokers, robust growth of the capital market and to enable trading in stock market at relatively lower costs for investors and brokers alike. The concept paper regarding Online Only Brokers along with relevant amendments in the Securities Brokers (Licensing and Operations) Regulations, 2016 and Public Offering (Regulated Securities Activities Licensing) Regulations, 2017 are available at SECP’s website for public comments.

QisstPay Gets Pakistan’s First Non Banking Finance Company License

For the first time in the country’s bleak startup history, the Securities and Exchange Commission of Pakistan (SECP) has awarded a Non-Banking Finance License to the highly popular Buy Now Pay Later (BNPL) startup QisstPay

According to the company’s co-founder and CEO, Jordan Olivas, this license is a huge first for the business. With it, QisstPay is now Pakistan’s first and only legally operational BNPL and is eligible to expand into other areas such as vehicle financing, home financing, microfinancing, leasing in the future.

It is a significant step by the SECP at a time when the BNPL is facing regulatory scrutiny around the world, particularly in the United States and the European Union.

On account of being the first player of a BNPL service in the field, QisstPay’s latest challenge is getting both consumers and merchants on the same page by convincing them to use this new product. By focusing solely on a complicated and unusual market like Pakistan’s, CEO Olivas is positive that this new change promises big rewards for QisstPay in 2022.

As the name suggests, QisstPay is the fastest-growing installment payment service for emerging markets, and provides a payment solution to online buyers, merchants, and business partners while increasing their consumer base. It is Pakistan’s first BNPL platform, and is a promising game-changer in the world of e-commerce and fintech.

QisstPay allows its clients to avail of interest-free installments and promotes 60 percent higher traffic and thereby, higher-order rates leading to an increase in sales. By allowing BNPL services, QisstPay focuses on merchant and customer acquisition by stimulating bigger growths instead of transactional volume.

Under SECP’s regulatory impetus, IAP and CDC-ITMinds Limited sign MoU for Digital Aggregation of Insurance Products

Karachi, December 03, 2021:Under the regulatory impetus of SECP, Insurance Association of Pakistan (IAP) and Central Depository Company of Pakistan Limited (CDC) signed a Memorandum of Understanding for the digital aggregation of Insurance products CDC’s Emalaak Financials platform. Ms. Sadia Khan, Commissioner – Securities and Exchange Commission of Pakistan (SECP) presided at the MoU Signing Ceremony at the CDC House, Karachi.

At the occasion, describing the features of the platform, CEO-CDC Mr. Badiuddin Akber said that “This Fintech solution of “Emlaak Financials” is indeed a landmark initiative of national significance, as it aims to become “Digital Financial Super Market” in Pakistan by leveraging the potential of technology to increase outreach for various financial products.”

Mr. Azfar Arshad, Chairman IAP applauded the efforts of CDC and SECP and said that this initiative will pave the way for the growth of the Insurance Industry.

While addressing the occasion, Commissioner SECP – Ms. Sadia Khan said that this digital transformation is expected to have an impact throughout the insurance value chain, from underwriting and pricing of products, their marketing and distribution, through to claims processing and the ongoing customer servicing. The distribution of insurance products through the digital portal EMLAAK is expected to provide low-cost and centralized solution to policy holders by providing comparative cost benefit analysis of different products on a centralized platform. This will lead to a reduction in the protection gap as new market segments are accessed as well as an increase in the insurance penetration. The goal of the regulator is to enable the insurance industry to play its rightful role both in terms of providing the social safety net as well as development of the capital market.

She commended the role of CDC in bringing this new initiative to life by capitalizing on its technological capability.

The event was attended by the senior members of IAP’s Executive Committee and other high ranking officials of the Insurance industry.