SECP formulates collateral management companies regulations

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ISLAMABAD, May 3 (APP): The Securities and Exchange Commission
of Pakistan (SECP) has formulated Collateral Management Companies
(Establishment and Operations) Regulations, 2017, under the
Companies Ordinance, 1984.
In devising the framework, the SECP carried out consultative
sessions with the major stakeholders, including provincial
departments of agriculture, State Bank of Pakistan, Central
Depository Company, Pakistan Agriculture Coalition, Pakistan
Mercantile Exchange, and others.
According to SECP press statement, collateral management, one
of the core areas in the National Financial Inclusion Strategy, was
envisaged to remove distortions, reduce market imperfections, avoid
waste and help farmers get the best possible price for their produce
while enabling banks to confidently lend against agricultural
produce that is professionally graded, stored and preserved.
The SECP was endeavoring to promote electronic trading and
warehouse receipt financing of agricultural commodities through the
platform of Pakistan Mercantile Exchange to enable the growers to
get a fair price for their produce, avail financing facilities and
promote an efficient payment system, it added.
The salient features of the regulations are licensing
conditions and financial resource requirements for collateral
management company, duties of a collateral management company and
the warehouse operator, and powers of the SECP to conduct inspection
of collateral management company, its accredited warehouses and any
matter connected with the warehousing business, as well as issue
directives to a collateral management company or its accredited
warehouse in the public interest.
The regulations have been published in the official gazette,
and have been placed on the SECP’s website
(https://www.secp.gov.pk/laws/regulations/).