Mutual Funds
Enhanced Role of Trustee
In accordance with the regulatory framework, every mutual fund is required to have an independent trustee as a key stakeholder in protecting the interests of the unit-holders.  As a capacity-building measure the SECP believes that the role of trustee needs to be enhanced with inclination to play a more proactive role to better safeguard the interest of unit holders in line with the international best practices.

Empowerment of Unit Holders of Mutual Funds
The SECP believes in empowerment of unit holders of a fund and for the purpose, envisions that the unit holders may be provided specific powers in relation to material aspects of a fund. Such powers may include winding down of the fund or change of management company, if the unit-holders are of the view that the fund is not being managed in their best interest.

Product Innovation
In order to promote the industry, the SECP is receptive to the innovative ideas and products that offer diverse solutions to satisfy the needs of participants of the industry. For this purpose specialized funds such as exchange-traded funds and constant money market funds are under consideration.

Independence of MUFAP
The MUFAP as a trade association of mutual funds in Pakistan has a mandate to develop the industry, which includes devising ways and means for ensuring investor protection. In order to make the association more effective in meeting its mandate, its present board structure/composition is under review. The SECP will explore ways whereby some representation on behalf of trustees and investors through independent directors is achieved.

Investment Banks and Leasing Companies
The SCD will facilitate consolidation in the NBFC sector through mergers and acquisitions in order to enhance risk absorption capacity of investment banks.

The SCD is in the process of initiating necessary consultations with the various stakeholders for bringing further improvements to the investment banking model. The SCD will also urge the investment banking community to broaden its horizon of activities by providing non-fund financial services.

The SBP has been requested to take special measures to address the issue of liquidity and bank borrowings of NBFCs in the best interest of the financial system.

The SCD will encourage the leasing companies to issue asset based securities to fund their long term lease assets and would urge the stronger leasing companies to support the ones who are in financial distress by extending them secured loans. 

Modaraba
Amendment to the Modaraba Law
In order to strengthen the regulatory framework and to bring about operational flexibility and consistency between the financial institutions under the NBFC regime and modarabas, existing provisions of the Modaraba Ordinance, Rules and Prudential Regulations for Modarabas are proposed to be reviewed comprehensively in consultation with all the stakeholders.

Introduction of the Concept of ‘Trustee’ and ‘Annual General Meeting’ of the Certificate Holders
In consultation with the Religious Board for Modarabas, the following policy issues pertaining to regulatory and operational matters of modaraba are being considered:

Examining the possibility of introduction of the concept of ‘trustee’ in the modaraba structure.  The key objective of this move is to restore and enhance market and investors’ confidence and protection of the assets of modaraba through transparency, accountability, and discipline.

Possibility to introduce the concept of holding AGM of modaraba certificate holders to discuss and approve the financial statements of modaraba. 

Possibility to adopt ‘the Islamic financial accounting standard on profit-and-loss sharing on deposits’ by modaraba, introduced by the Institute of Chartered Accountants of Pakistan.

Voluntary Pension System
Amendments to the Voluntary Pension System Rules, 2005
The Voluntary Pension System Rules which were notified in 2005, are under review for amendments in the wake of uncertainty experienced by the financial markets globally, in recent years. The draft of revised rules containing suitable amendments, made in consultation with industry, is expected to be formally adopted for compliance during the next year.

Law on pensions and savings schemes
In 2008, through an amendment to the SECP Act, 1997, the SECP’s jurisdiction was extended to include promotion and regulation of post-retirement benefit schemes set up by companies and state-owned corporations. In order to regulate such schemes, a consultant was hired through ADB to draft legislation. The SECP’s Legal Department is reviewing the draft legislation for further action in the context of the 18th constitutional amendment. The amendment envisages transfer of subjects relating to benefits and welfare of laborers from federal government to the provincial governments.

Removal of tax disparities
In order to remove tax inequalities between pension funds established under the 2005 Voluntary Pension System Rules, 2005 and post-employment benefit schemes established by companies, interaction with FBR will continue to bring both classes of retirement schemes on equitable footings from tax perspective.

REITS
In order to encourage the REIT schemes, the provincial and local governments will be urged to provide special concessionary rates and exemptions from duties. The ongoing stakeholder consultation will be continued in which feedback is obtained from the market players to improve the quality of regulatory mechanism.