The Securities and Exchange Commission of Pakistan (SECP) has introduced new regulatory requirements for professional clearing members regarding the appointment, renewal, and termination of their Chief Executive Officers (CEOs). As per the latest amendments, all such decisions will now require prior approval from the SECP.
Regulatory Update: SECP’s New Directive
On March 6, 2025, the SECP issued S.R.O. 244(I)/2025, releasing draft amendments to the Professional Clearing Members Regulations, 2020. These amendments aim to enhance regulatory oversight and governance in the financial sector.
Key Requirements for CEO Appointments
Under the new regulations, the Board of Directors of a professional clearing member is responsible for determining the procedure for the appointment, terms, and conditions of the CEO. The following steps must be followed:
Shortlisting Candidates: The board must shortlist three candidates who meet the SECP’s fit and proper criteria.
Submission to SECP: One name, along with a recommendation, must be submitted to the SECP for approval.
Regulatory Approval:
If the SECP finds the candidate suitable, it will approve the appointment.
If the candidate is deemed unsuitable, the SECP will ask the clearing member to propose another candidate for consideration.
CEO Renewal and Termination
- Renewal of a CEO’s tenure will also require prior SECP approval.
- Termination of services must be reported to the SECP, ensuring compliance with regulatory requirements.
Mandatory Chief Compliance Officer (CCO) Appointment
In addition to CEO regulations, every professional clearing member must appoint a Chief Compliance Officer (CCO). The CCO must meet fit and proper criteria and will be responsible for ensuring compliance with SECP regulations.
Compliance Reporting Requirements
The Chief Compliance Officer must submit a semi-annual report to both:
- The Board of Directors, and
- The SECP
This report should cover:
- Compliance issues reported during the period,
- Corrective actions taken,
- Status of resolutions.
Why These Changes Matter
The SECP’s amendments are designed to:
- Strengthen corporate governance,
- Ensure qualified leadership in professional clearing members,
- Enhance compliance oversight to prevent financial malpractices.
Final Thoughts
With the latest amendments, professional clearing members must carefully adhere to SECP guidelines when appointing or renewing a CEO. The additional oversight aims to improve financial transparency and regulatory compliance within the sector.
Also Read:
- How to Register a Company in Pakistan
- How to File Income Tax Return in 2025
- Tax Return Master Course
