June 25: the Securities and Exchange Commission of Pakistan (SECP) has revamped the regulatory framework for the mutual funds industry with an aim to meet the changing industry dynamics, implementing international best practices, safeguarding investors’ and providing ease of doing business.
After a lengthy consultative process with the Mutual Fund Association of Pakistan (MUFAP) a number of measures have been introduced recently which include replacing seed capital requirements of Rs200 million with minimum fund size of Rs100 million to offer flexibility in launching new mutual funds. The SECP also allowed to charge selling and marketing expense to fund, charging of back office accounting expenses and granting permission for charging sales load on direct investment and on-online investment which was earlier restricted.
In order to promote ease of doing business the Commission on June 20, 2019 also approved further amendments in the NBFC Regulations 2008 to provide for operational flexibility to Asset Management Companies (AMCs). This includes enhancing the expense ratio cap for equity funds from 4% to 4.5% of the net assets, removing all sub caps particularly regulatory caps imposed earlier on the management fee, excluding all government levies/charges from the expense ratio. Moreover, to facilitate the expansion of outreach of mutual funds, AMCs have been allowed to charge Selling and Marketing expenses including Alternative Delivery Channels expenses to all categories of funds without any time and sub-limit.
Further, to reduce the operational burden on AMCs the Commission has also removed different requirements of regulatory approvals for mutual funds. AMCs are allowed to make changes in Constitutive Documents (other than changes in the Fundamental Attributes of the fund) including the changes with respect to change of regulatory requirements without the approval of the Commission. Separate requirement for approval of the Commission for appointment of trustee of each new CIS has also been withdrawn. The validity of the Commission’s approval for constitutive documents has been extended from 60 days to 120 days.
The above measures have been introduced to facilitate the growth of the mutual funds industry and to provide a more facilitative and robust environment for the sector.
June 25, 2019 (MLN): The Banking sector spread for May 2019 has broadened by 10 basis points (bps) over the month which brings its latest value to 5.78% as compared to prior month's revised spread of 5.68%. Similarly, the spread has broadened by 96 bps as compared to the same period last year.
In accordance with the State Bank of Pakistan's monthly data released on Weighted Average Lending & Deposit Rates, the lending rate for all banks (inclusive of zero markup) broadened by 20 bps as it stood at 11.12%. Meanwhile, the deposit rate broadened by 10 bps over month, thus bringing the latest rate to 5.34%.
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June 25, 2019 (MLN): JS Investments Limited in its meeting held earlier today, i.e. June 25, 2019 has decided to recommend to purchase/ buy back up to a maximum of 27,934,840 of its issued ordinary shares of the face value of Rs.10 each, at a purchase price of Rs.18 per share.
According to an official announcement released by the company, the shares will be purchased through tender offer from August 2, 2019 to August 31, 2019. It was further stated that the purchase will be made in cash & out of distributable profits of the company.
The notification also added that the purchase will improve the EPS subsequent to the purchase and will also result in improved dividend. Moreover, it will provide an opportunity of exit to those members who wish to liquidate their investments.
As a result of this action, the company’s financial position is expected to improve as the company will utilize available funds to purchase capital which is in excess of the company’s requirements.
In this regard, the Board of Directors have decided to convene an Extra Ordinary General Meeting on July 24, 2019 to the seek members’ approval to the aforementioned proposal to purchase shares.
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June 25, 2019 (MLN): DAP offtake for the month of May 2019 has increased by 240.8 percent to 213 thousand tonnes, mainly due to the subsidy provided by Government of Punjab.
As per the data maintained by the National Fertilizer Development Centre, the largest portion of overall offtake during the said period was sold in Punjab, where around 136 thousand tonnes were consumed.
From the remaining amount, 64 thousand tonnes were sold in Sindh, 7.3 thousand tonnes in Balochistan, whereas 6.5 thousand tonnes were sold in Khyber Pakhtunkhwa.
Total availability of DAP during May 2019 was 717 thousand tonnes, comprising of 620 thousand tonnes inventory, 21 thousand tonnes imported supplies and 76 thousand tonnes of local production.
Therefore, the closing balance works out to be about 503 thousand tonnes.
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Jun 25, 2019: The Pakistan Economy Watch (PEW) on Tuesday lauded the incumbent government to take a hard way of documentation of the economy to generate resources.
The governments in the past have always preferred foreign loans over taxes, which has threatened the survival of the country, it said.
Pakistan started taking loans for development projects but mismanagement pushed the country to take loans for balance of payments and now loans are being taken to repay old loans, said Dr. Murtaza Mughal, President PEW.
He said that the government should take harsh steps against the property sector which has become the heaven of black money.
Real estate transactions through cash should be banned and banking transaction should be made mandatory and the same procedure should be adopted in buying and selling cars.
Dr. Murtaza Mughal said that there was no need to celebrate temporary relief by Financial Action Task Force (FATF) as the sword of action was still hanging over Pakistan.
The credit of defeat of India in FATF goes the government, Foreign Office and the Pakistani delegation who won the support of some European countries which have always supported India.
India will never accept its failure and initiate more efforts to get Pakistan blacklisted to make its toxic agenda a reality.
However mere diplomacy would not help Pakistan in the long run and solid steps were needed to fulfill eighteen demands of the global watchdog.