NA okays stock exchanges law

karachi - The Stock Exchanges Corporatisation, Demutual-isation and Integration Law drafted by the Securities and Exchange Commission of Pakistan has been approved by the National Assembly and is soon expected to be placed for promulgation before the Senate.
According to SECP press release issued here on Friday, the Act was drafted after consensus was reached with all relevant stakeholders including the Members, Management and Board of Directors of the stock exchanges.
It will provide for the conversion of the existing non-profit, mutually owned stock exchanges to for-profit entities owned by the shareholders, the statement added.
The act would not only enable conversion of a stock exchange limited by guarantee into one limited by shares but would also segregate ownership and trading rights.
Hence demutualisation will bring balance among interests of different stakeholders in the corporate and governance structure of a stock exchange, the press statement said.
The Demutualisation Law specifies timelines, commencing from its promulgation, for completion of various steps/milestone and provides for the demutualisation process to be completed within a period of about 120 days from the enactment of the said Law.
The existing mutual ownership structure of the exchanges has been an impediment to impartial decision making and access to capital.
This aspect has been addressed through demutualisation which is now a well established global trend and will bring our exchanges at par with several other regional and international jurisdictions such as India, Malaysia, Hong Kong, Australia, UK, USA, etc.
Further, apart from attracting capital, a demutualised/ corporatised entity would result in improvement in the governance structure, segregation of regulatory functions from commercial functions and separation of trading rights and ownership rights.
Demutualisation / corpor-atisation would also assist in attracting international strategic partners. In addition, the legislation would provide mechanism and process of corporatisation and demutualisation of a stock exchange, provisions relating to sale and purchase of shares held by various categories of shareholders and provisions relating to trading right holders. It would also provide provisions relating to ownership and voting rights, provision relating to governance structure of the demutualised stock exchange to ensure segregation of its regulatory function from its commercial function, enabling provision for self- listing of demutualised stock exchange and empowering the SECP to supervise a demutualised stock exchange as a listed company on its own exchange.