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SECP to issue code for companies to deal with rating agencies

ISLAMABAD (February 18 2004): The heads of SECP and State Bank discussed development of secondary market in Term Finance Certificates and government securities, credit ratings, regulation of real estate developers and brokers.

They also discussed external auditors for financial institutions of a group, review of the status and future course of action with regard to non-regulated brokerage business, and consolidated supervision.

The meeting also agreed to eliminate certain anomalies in the Margin Trading Rules drafted by the SECP and SBP and the future roadmap for the phasing out of Carry-over Transactions.

The ninth meeting of the Co-ordination Committee of the Securities and Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP) was held at the SECP head office in Islamabad.

During the meeting, the heads of the two regulatory bodies discussed issues pertaining to holistic regulation of the financial sector.

Various issues pertaining to credit rating agencies were also discussed and SBP Governor Dr Ishrat Husain suggested that to maintain investors' confidence in ratings the SECP may issue a Code of Ethics which should lay down certain principles for companies to follow while dealing with credit rating agencies.

While discussing particular instances where the two agencies require each other's co-operation SECP Chairman Dr Tariq Hassan urged the regulatory agencies to not only be cognisant of the developments of markets around the world but at the same time think of innovative and progressive regulatory measures which would not only be more effective but also efficient in terms of time and the costs involved.

The SECP-SBP Co-ordination Committee meetings are held once a quarter and include high level officials from both institutions.

These formal meetings supplement the on-going regular co-ordination between the two regulators on all matters of mutual interest.

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