Islamabad, August 11: The Securities and Exchange Commission of Pakistan (SECP) has introduced maximum terms limits for the Chief Executive Officers and Independent Directors to serve in the Capital Market Infrastructure Institutions (CMIIs) i.e. PSX, NCCPL, CDC and PMEX.
SECP has decided to introduce tenure limits upon CEO of a CMII to a maximum of three terms with the third term to be allowed only in case of exceptional performance and subject to a competitive selection process.
SECP has also introduced tenure limits of maximum three terms for independent directors across all CMIIs in Pakistan. Further, no individual shall serve as independent director on the board of the same CMII for more than two terms.
The tenure limits have been introduced to uphold the principles of good governance and to ensure regulatory effectiveness of the CMIIs as these entities perform important public policy functions including the infrastructure, services and regulations for smooth and efficient working of the capital markets. These reforms are expected to encourage greater participation by a variety of professionals in the governance of the CMIIs and promote a culture of independence, accountability and objective decision making for better protection of public interest.
Earlier, the Chairman SECP, Mr. Akif Saeed during his meetings with the boards of directors of PSX, NCCPL, CDC and PMEX last week, stressed upon the need for CMIIs to follow the highest standards of corporate governance and encouraged to frame comprehensive human resource policies for greater transparency. He also discussed the importance of collaboration amongst CMIIs for launch of new derivative products, operationalization of Online Only Brokers, increase in investor base, development of debt market, strengthening of cybersecurity measures and launch of Centralized Gateway Portal for onboarding of customers and sharing of KYC information across different asset classes.
The Commissioner SECP, Mr. Abdul Rehman Warraich also stressed upon the need of appropriate distribution of responsibility and authority between BOD and management, a transparent and equitable compensation structure and enhanced focus on core operations and profitability of the institutions, and the need to build adequate buffers and reserves in each institution in order to manage the risks emanating from their operations and to actively undertake market development activities on a sustainable basis. He also stressed upon the need for proper succession planning to promote an inclusive workplace culture by identifying and developing potential leaders for future challenges. It was also agreed that governance quality can be enhanced by strengthening the boards’ independence, which is crucial for the long-term viability of all CMIIs in Pakistan.
The limits have been imposed by approving amendments to licensing regulations of CMIIs. The notifications of approved amendments are available on SECP’s website at https://www.secp.gov.pk/laws/notifications/ .
