Pakistan Stock Exchange Limited (PSX) has invited public comments on a series of proposed regulatory amendments designed to strengthen oversight, improve operational efficiency, and enhance transparency within the capital market. The proposals focus on three key areas: mandatory CEO participation in appeal hearings, regulatory adjustments for Internet-Based Trading Services (IBTS), and reforms to arbitration and appeal procedures for trade-related disputes.
The first set of amendments seeks to make the presence of a company’s Chief Executive Officer (CEO) mandatory during appeal hearings conducted before the Appellant Committee. Currently, CEOs are encouraged, but not required, to attend these hearings under Regulations 5.21A and 20.4A, which allow listed companies and securities brokers to appeal enforcement orders issued by the Chief Regulatory Officer (CRO). PSX believes that requiring CEO participation will enhance the credibility of the appeal process, ensure accountability, and provide deeper insights into the issues under review. Other officials or consultants may accompany the CEO, and in exceptional circumstances, a senior management officer can represent the company with written authorization and a clear explanation for the CEO’s absence. These measures aim to ensure that regulatory proceedings are handled with the highest level of executive engagement.
The second set of amendments addresses operational challenges faced by Trading Only and Online Only Securities Brokers regarding Internet-Based Trading Services (IBTS). Under current rules, brokers must have their IBTS systems audited and penetration tested every two years by a PSX-approved audit firm, with the report submitted within two months of the assessment. Many brokers relying on IBTS infrastructure provided by Professional Clearing Members (PCMs) have struggled to comply with this timeline. PSX now proposes to waive the time-specific condition for brokers using PCM-provided IBTS systems, while retaining the requirement for independent auditing and penetration testing. This change aims to provide flexibility in timing without compromising system security or integrity.
The third area of proposed reform focuses on arbitration and appeal procedures for trade disputes. PSX plans to streamline these processes, enhance transparency, and ensure timely resolution of investor complaints. Key measures include mandating brokers to follow internal complaint-handling procedures, introducing random balloting for the selection of industry experts serving as Appellate Panel members or Sole Arbitrators, and clarifying that parallel court filings will not suspend PSX proceedings. Additionally, procedural timelines are proposed to be shortened, and the size of the Appellate Panel will be reduced—from five members to three in appeals against Sole Arbitrator awards, and to four in appeals against Sub-Panel awards. These changes are aimed at improving operational efficiency and fairness in dispute resolution while maintaining investor confidence.
PSX’s public consultation process provides market participants, investors, and stakeholders the opportunity to review the proposed amendments and offer feedback, reflecting the exchange’s commitment to inclusive and transparent regulatory governance. These reforms are part of PSX’s broader effort to enhance market discipline, protect investor interests, and maintain a robust capital market ecosystem in Pakistan.
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