The Pakistan Stock Brokers Association has expressed serious reservations proposed amendments to the PSX Regulations concerning Government Debt Securities (GDS) Market Provisions and asked PSX to withdraw the amendments.
In a letter to the PSX Chief Regulatory Officer, the association said that it is deeply astonished at the manner in which this decision has been made in isolation, without due regard to the prior discussions and understandings reached during meeting with PSX dated September 9, 2024.
The letter said the proposed amendments are violative of the requirements of Sections 63 and 64 of the Securities Act, 2015, which categorically states that no person shall carry on a regulated securities activity or purport to do so unless such person is licensed by the Commission under the Act and operates in accordance with such license. We fail to understand how such a fundamental legal requirement has been disregarded in the subject case.
This oversight not only contravenes the explicit provisions of the law but also sets a concerning precedent that risks undermining the credibility and enforceability of the regulatory framework. Such deviations could have far-reaching implications for the integrity of the Capital Markets and the confidence of stakeholders, it added.
The association said that while it understands that the regulatory authorities generally possess the discretion to relax regulatory requirements, however, while exercising discretionary powers, even if conferred upon by law and rules, the regulator must observe certain norms and must do so in accordance with the law.
The association said that it is imperative to highlight that, under the current legal framework, Securities Brokers are required to obtain a license to carry out regulated securities activities. This licensing process entails fulfilling all financial and regulatory requirements. In contrast, under the subject amendments, banks and mutual funds are being granted direct access to participate in these activities merely through amendments to the Regulations.
This practice is not only inequitable but is also in direct violation of the fundamental provisions and established principles enshrined in the Capital Market Laws, which emphasize the importance of providing a level playing field for all market participants, it said.
Needless to mention that perceptions are important, justice must not only be done but must be seen to be done. Trustworthiness must be ingrained in the regulatory process to maintain confidence. The Constitution does not permit discrimination. Exceptionalism too has no place in the Constitution, it added.
In light of the foregoing, the association has requested PSX to withdraw the proposed amendments as they violate the provisions of the Securities Act, 2015 and are inconsistent with the principle of providing a level playing field. This will ensure that all regulatory measures remain compliant with the legal framework. Further, it is reiterated that any participation in regulated securities activities should come through the Securities Brokerage License.
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