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The Securities and Exchange Commission of Pakistan (SECP) has issued a Consultation Paper outlining a strategic framework to elevate industry associations into Self-Regulatory Organizations (SROs) over the next three years. The initiative is designed to strengthen Pakistan’s financial sector by enhancing transparency, governance, and self-regulation.

Traditionally focused on advocacy, industry associations worldwide are increasingly contributing to economic development through policy dialogue, compliance support, and responsible practices. SECP’s proposed principles aim to formalize this evolution in Pakistan, granting eligible associations regulatory responsibilities such as setting ethical standards, monitoring conduct, enforcing rules, and advancing sector-specific initiatives in alignment with SECP’s goals.

A key element of the framework is the compulsory conversion of trade associations into Section 42 not-for-profit companies under the Companies Act, 2017. This move is expected to boost transparency, improve governance, and reinforce financial integrity. The proposal incorporates international best practices, including merit-based and diverse membership, effective governance, stakeholder involvement, conflict-of-interest controls, fair dispute resolution, ethical codes of conduct, and continuous member training and investor education.

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To further enhance sector-specific advocacy, SECP is promoting the creation of specialized associations tailored to individual sub-sectors. These focused groups will better address the operational and compliance needs unique to each segment.

This move reflects SECP’s broader commitment to building a transparent, accountable, and resilient financial ecosystem. By enabling the transformation of trade associations into operational SROs, the Commission seeks to strengthen market discipline, inspire investor confidence, and drive sustainable sectoral growth.