Key Points
- Group to target high costs and lengthy issuance
- Review covers credit ratings, regulations and Sukuk
- Report due within 45 days of formation
ISLAMABAD: Pakistan’s securities regulator has constituted a working group to review the country’s corporate debt market and recommend reforms to reduce issuance costs and timelines, standardise documentation and attract enhanced market participation.
The Securities and Exchange Commission of Pakistan (SECP) said in a recent notification that the group would conduct an end-to-end assessment of the market. It would also identify regulatory, legal and operational bottlenecks affecting the issuance of corporate debt securities.
The review will cover both privately placed and publicly offered debt securities. It will examine the time required at each stage of the issuance.
The working group is also tasked with assessing regulatory fees, professional charges, listing expenses, taxation and other transaction costs, with recommendations expected to rationalise such costs.
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Pakistan credit rating framework
The group will also review Pakistan’s credit-rating framework and assess how rating requirements affect issuance timelines, costs and market accessibility.
It will propose measures to improve efficiency, transparency and market confidence and consider reforms to simplify the rating process and encourage innovation in rating products.
A separate part of the mandate focuses on Sukuk, or Islamic investment certificates.
The group will examine the regulatory and Shariah framework governing Sukuk issuance.
It would also identify legal, Shariah and operational impediments that contribute to higher costs or longer issuance timelines.
It will recommend standardised structures and other measures to expand Pakistan’s Islamic corporate debt market.
SECP Commissioner Muhammad Ali Farid Khwaja would head the group. It would include representatives from the Pakistan Stock Exchange, InfraZamin Pakistan, securities firms, Askari Bank, the Central Depository Company, PACRA Credit Rating Agency, the Ministry of Finance and other market participants.
The SECP said the group may co-opt additional experts or institutions where required. It has been directed to submit its report within 45 days of its constitution.
The Commission forms the group against the backdrop of Pakistan’s need to deepen its capital markets and diversify corporate financing beyond traditional bank lending.
A more developed corporate debt market can provide companies with greater access to long-term capital and give investors a broader range of investment instruments.
