Securities and Exchange Commission of Pakistan seeks feedback on Draft Bond Pricing Agency Regulations

Securities and Exchange Commission of Pakistan seeks feedback on Draft Bond Pricing Agency Regulations

 

Islamabad, February 19, 2013 (PPI-OT): The Securities and Exchange Commission of Pakistan (SECP) has approved the Draft Bond Pricing Agency Regulations, 2013, for soliciting feedback. The regulations have been notified in the official gazette of Pakistan and also available on the SECP’s official discussion forum (http://forum.secp.gov.pk/forum.php), where comments can be submitted online, by March 21. Pricing of fixed income securities is an issue faced not only in Pakistan but also the global debt market. This is primarily due to low trading volumes of listed debt and the fact that these securities are predominantly traded over-the-counter.

The technical expertise required for valuation of debt securities is costly both in terms of infrastructure and human capital, thus prohibiting investors to value such securities themselves. Until now the Mutual Funds Association of Pakistan has been providing pricings of only corporate debt to the market. However, in order to ensure organized development of this crucial market segment, the SECP has envisaged that an independent entity, capable of providing prices based on international benchmark pricing models, needs to be established to provide fair value of all debt securities to the market on a daily basis and in a transparent manner.

The regulations are based on recommendations of a committee constituted by the SECP comprising representatives of the SECP, the State Bank of Pakistan and the two credit rating agencies. They broadly cover the eligibility conditions for registration as a bond pricing agency, the procedure for its registration and renewal, continuing obligations of a bond pricing agency and disciplinary powers of the SECP.

The promulgation of the regulations will enable the relevant entities to register with the SECP as independent bond pricing agencies and provide pricing services to the market in a transparent and fair manner.

The establishment of a bond pricing agency in Pakistan is expected to help stimulate activity in the primary and secondary markets and induce foreign investment through enhancing transparency in prices and reducing information asymmetry.

This will assist in increasing the depth of this under-developed market segment. Since the market will gain access to accurate information on fair asset values, credibility of financial statements of institutions will be enhanced through accurate asset-liability valuation. While a bond pricing agency is expected to facilitate in the establishment of a matured debt market in Pakistan, it will also result in the development of new and sophisticated products.

Tickers:

1. The Securities and Exchange Commission of Pakistan (SECP) has approved the Draft Bond Pricing Agency Regulations, 2013: SECP

2. The regulations are based on recommendations of a committee constituted by the SECP comprising representatives of the SECP, the State Bank of Pakistan and the two credit rating agencies: SECP

3. The regulations cover the eligibility conditions for registration as a bond pricing agency, the procedure for its registration and renewal, continuing obligations of a bond pricing agency and disciplinary powers of the SECP

For more information, contact:
Shakil Ahmad Chaudhary
Head, Internal and External Communication
Securities and Exchange Commission of Pakistan (SECP)
NIC Building, 63 Jinnah Avenue, Islamabad
Tel: +9251 921 4005 or 921 4009 (Ext. 378)
Fax: +9251 920 6459
Cell: +92302 855 2254
E-mail: shakil.chaudhary@secp.gov.pk

 
 
 

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