Islamabad, May 12: The Securities and Exchange Commission of Pakistan (SECP) has released a Consultation Paper on Standard Principles for Recognition and Conduct of Industry Associations, introducing a strategic framework aimed at strengthening Pakistan’s financial sector through enhanced self-regulation.
In today’s dynamic regulatory landscape, industry associations are increasingly moving beyond their conventional role as advocacy bodies. Globally, they are being recognized as vital contributors to economic development by engaging in policy dialogue, supporting regulatory compliance, and fostering responsible industry practices.
The proposed framework sets out a clear roadmap for eligible industry associations to transition into Self-Regulatory Organizations (SROs) over the next three years. These SROs will be vested with the authority to set ethical standards, monitor industry conduct, enforce compliance, and drive sector-specific initiatives, all in alignment with SECP’s overarching regulatory objectives.
Key features of the proposal include the mandatory conversion of trade associations into Section 42 companies under the Companies Act, 2017, ensuring they operate as not-for-profit entities. This aims to enhance transparency, strengthen governance, and uphold financial integrity. The framework also aligns with international best practices, emphasizing diverse and merit-based membership, strong governance, conflict-of-interest safeguards, stakeholder engagement, fair dispute resolution, a robust code of conduct, and ongoing investment in training of members and investor education.
To enhance sector-specific advocacy, the Commission encourages the establishment of specialized associations within regulated sectors, each focusing on distinct sub-sectors. This targeted approach enables tailored representation that addresses the unique operational dynamics, challenges, and compliance requirements of each segment.
This initiative underscores SECP’s commitment to nurturing a transparent, accountable, and competitive financial ecosystem. By enabling the evolution of industry associations into functional SROs, the Commission aims to elevate market integrity, build investor confidence, and foster sustainable sectoral growth.
