SECP amends Securities & Futures Advisers Regulations to improve investor base

June 20, 2023 (MLN): The Securities and Exchange Commission of Pakistan (SECP) has notified amendments to the Securities and Futures Advisers (Licensing and Operations) Regulations, 2017, SECP said in a press statement issued today.

These amendments aim to develop a resilient market for Securities and Futures Advisers, facilitating ease of doing business, improving financial inclusion, and expanding the investor base.

The introduced amendments align the existing regulations with market developments and eliminate redundancies to facilitate ease of doing business.

One of the significant facilitations provided is the reduction in financial resource requirement for Securities and Futures Advisers applying for a license as a distributor to Rs500,000 in the case of a company and Rs250,000 for individuals.

The requirement on sponsors of Securities & Futures Advisers to collectively hold shares of 51% or 25 % shares in the case of a listed company has been eliminated.

To further decrease the regulatory burden, a single consolidated Affidavit is provided. Excessive documentation requirements in Annexure-B of the regulations have been removed, the Fit & Proper criterion has been rationalized and a new Annexure-C relating to the contents of the Standard Distribution Agreement for distributors has been inserted.

SECP believes regulatory amendments/reforms are essential for the long-term sustainability of the Securities and Futures Advisors sector in Pakistan.

In addition, scheduled banks, microfinance banks, non-bank microfinance companies, and electronic money institutions are exempted from obtaining a separate license as a distributor.

The notified regulations enable the distribution of Voluntary Pension Funds offered by pension fund managers other than Asset Management Companies and allow compensation in the capacity of the distributor to be received from AMC’s/Pension Fund Manager barring the distributor from charging any advisory fees from clients related to distributions services.

For digital advisory/distribution platforms, the regulations now include requirements for compliance with data protection and cybersecurity.

The amendments also introduce the need for 15 days prior intimation to the Commission before launching a platform and submission of information regarding existing digital platforms.

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