Ayesha Mudassar

The development of a modern and efficient capital market based on sound regulatory principles will provide the desired incentives for Pakistan’s socioeconomic progress. This was stated by the key stakeholders of Pakistan’s capital markets while speaking at a meeting organised by the ISE Towers REIT Management Company Limited. On the occasion, Managing Director of the Central Depository Company (CDC) Badiuddin Akber said that CDC was fulfilling its commitments towards strengthening the capital market through adopting technological advancements, promoting quality service, facilitating investment and improving ease of doing business. He further stated that a sophisticated capital market supported corporate and government initiatives, financed new ideas and simplified the management of financial risks, thereby ensuring that the funds were used for achieving socioeconomic growth and development.

Speaking on the occasion, Muhammad Lukman, Chief Executive Officer (CEO) of National Clearing Company of Pakistan Limited (NCCPL), said that NCCPL had not only grown as a clearing and settlement service organisation in terms of its capacity and capability, but had also started making valuable additions to products and services portfolio to support the capital market investors and contribute towards development and transparency of capital market operations. “Our offerings to the public aim to build investor confidence and increase their participation in capital market activities,” Lukman added. Speaking at the meeting, Farrukh H Khan, CEO of Pakistan Stock Exchange (PSX), said economic growth in a modern economy hinges on efficient capital markets, which pool domestic savings and mobilise foreign capital for productive investments. “A broad-based capital market could play a significant role in addressing the country's structural imbalances that have plagued the economy over the years.

These structural imbalances include a small tax base, a lack of documentation, and low saving and investment rates.” In Pakistan, the capital market has a robust triangular market infrastructure foundation comprising the PSX, the CDC and NCCPL. The Securities Exchange Commission of Pakistan (SECP) serves as a regulatory body for the smooth functioning of these markets. Upon careful comparative analysis of international capital markets, it has been witnessed that countries with efficient capital markets have attracted greater foreign direct investment and effectively supported the economy. Examples of highly organised capital markets include the New York Stock Exchange, American Stock Exchange, London Stock Exchange and NASDAQ. Following the trend, the SECP must take initiatives to strengthen the market and provide convenience to investors as deep and resilient capital markets will surely contribute to the country’s economic growth and financial stability.

Credit: INP-WealthPk