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Institute of Financial Markets OF Pakistan

(Formerly Institute of Capital Markets)

NEWSLETTER | DECEMBER 2016

The name of the Institute has been changed

from Institute of Capital Markets (ICM) to Institute of

Financial Markets of Pakistan (IFMP).

IFMP’s New Address and Telephone Number:

Park Avenue Building, Suite No. 1009, 10th Floor,

P.E.C.H.S Block No. 6, Shahrah-e-Faisal, Karachi.

+92 (21) 34540843-44

INVESTORS’ TERMS OF THE MONTH

REGULATORY NEWSFLASH

BUSINESS AND ECONOMIC NEWSFLASH

MARKETS IN REVIEW

REITS IN ASIA: A COMPARISON

OF REGULATIONS

IFMP ACTIVITIES

TAKAFUL: THE CHALLENGES

00 CONTENT

01

Message from the CEO

02

Introduction to the

Organization

03

IFMP Activities

04

REITs in Asia: A Com-

parison of Regulations

07

Business and

Economic Newsflash

08

Regulatory Newsflash

09

Markets in Review

06

Investors’ Terms of the

Month

Page: 3 Page: 4

Page: 6 Page: 14

Page: 15 Page: 16 Page: 17

DETAILS: www.ifmp.org.pk 92 (21) 34540843-44 [email protected]

05

Takaful: The Challenges

Page: 10

Page: 5

Message From The CEO

The last few years have seen a rapid growth in size, quality and

sophistication of financial markets, because of changes in the policy

and regulatory environment, the entrepreneurial initiatives of indi-

viduals and institutions, and the availability of trained manpower.

The continuing growth of financial markets is further adding to the

demand for well-trained professionals.

Institute of Financial Markets of Pakistan is dedicated to the profes-

sional development of financial markets and research on financial

markets as well as the well being of financial markets by educating

the professionals about the norms and ethics being practiced in the

markets. IFMP has had a pioneering role in meeting the demand for

educated manpower. It is Pakistan's first specialized institution

devoted to the education and updating of knowledge of manpower

for financial markets. It will provide high-quality educational stand-

ards for all types of financial market participants; investors, bro-

kers, mutual funds, investment banks and policy makers.

The Institute's main activities are (1) Licensing the professionals

working in the financial markets by certifications. The institute’s key

responsibility is to educate the professionals working in different

financial markets of Pakistan through examining their knowledge in

their relevant field of work; (2) Studying the latest developments in

the financial markets in order to discover whether there is such a

thing as an ideal market economy; and (3) Contributing to the devel-

opment of financial markets in Pakistan. By means of these three

activities the Institute seeks to communicate its ideas to the audi-

ence both at home and overseas. The Institute's research is intend-

ed, first and foremost, to be neutral, professional and practical.

Rooted in practice, it aims to contribute to the healthy development

of Pakistani financial markets as well as to related policies by con-

ducting neutral and professional studies of how these markets and

the financial system are regulated and organized and how they per-

form.

The economy is changing all the time. The Institute hopes that, by

responding to these changes positively, it can contribute to the dy-

namic development of the country's financial markets as well as of

the economy itself.

Mr. Muhammad Ali Khan

Message from the Chief Executive Officer

The last few years have seen a rapid growth in size, quality and so-

phistication of financial markets, because of changes in the policy

and regulatory environment, the entrepreneurial initiatives of in-

dividuals and institutions, and the availability of trained manpow-

er. The continuing growth of financial markets is further adding to

the demand for well-trained professionals.

Institute of Financial Markets of Pakistan is dedicated to the pro-

fessional development of financial markets and research on finan-

cial markets as well as the well being of financial markets by edu-

cating the professionals about the norms and ethics being practiced in the markets. IFMP

has had a pioneering role in meeting the demand for educated manpower. It is Pakistan's

first specialized institution devoted to the education and updating of knowledge of man-

power for financial markets. It will provide high-quality educational standards for all

types of financial market participants; investors, brokers, mutual funds, investment

banks and policy makers.

The Institute's main activities are (1) Licensing the professionals working in the financial

markets by certifications. The institute’s key responsibility is to educate the professionals

working in different financial markets of Pakistan through examining their knowledge in

their relevant field of work; (2) Studying the latest developments in the financial markets

in order to discover whether there is such a thing as an ideal market economy; and (3)

Contributing to the development of financial markets in Pakistan. By means of these

three activities the Institute seeks to communicate its ideas to the audience both at home

and overseas. The Institute's research is intended, first and foremost, to be neutral, pro-

fessional and practical. Rooted in practice, it aims to contribute to the healthy develop-

ment of Pakistani financial markets as well as to related policies by conducting neutral

and professional studies of how these markets and the financial system are regulated and

organized and how they perform.

The economy is changing all the time. The Institute hopes that, by responding to these

changes positively, it can contribute to the dynamic development of the country's finan-

cial markets as well as of the economy itself.


IFMP Monthly Newsletter 1 December, 2016

01

The Institute of Financial Markets of Pakistan (IFMP) (Formerly Institute of Capital Markets), Pakistan’s first secu-rities market institute, has been established as a permanent platform to develop quality human capital, meet the emerging

professional knowledge needs of financial markets and create standards among market professionals. The Institute has been

envisioned to conduct various licensing examinations leading to certifications for different segments of the financial markets. IFMP develops a pool of trained and certified professionals,

skilled not only to deal in conventional instruments but also to

trade in new and complex financial market products.

IFMP Monthly Newsletter 2

Introduction To The Organization

PROGRAMMES

LICENSING CERTIFICATIONS

Fundamentals of Capital Markets

Pakistan’s Market Regulations

Stock Brokers Certification

Mutual Funds Distributors

Commodity Brokers Certification

INSURANCE CERTIFICATIONS

General Takaful Training

Family Takaful Training

Life Insurance Agent

Non-Life Insurance Agent

OTHER CERTIFICATIONS

Financial Advisors Certification

Financial Derivative Traders

Certification

Compliance Officers Certification

Clearing and Settlement Operations

Certification

Risk Management Certification

Capital Budgeting and Corporate

Finance Certification

Investment Banking and Analysis

Certification

Islamic Finance Certification

Research Analysts Certification

December, 2016

For more information, please visit our website: www.ifmp.org.pk

-FEE STRUCTURE-

Candidate Registration Fee (One-Time)

Rs.10,000

Examination Registration Fee

Rs.7,000

Membership Fee (Annual)

Rs.5,000

Study Guide (Hard Copy)

Rs.800

-EXAMINATION

SCHEDULE-

(2016-2017)

- Sunday, 29 January, 2017

- Sunday, 26 March, 2017

- Sunday, 28 May, 2017

02

Message From The CEO

The last few years have seen a rapid growth in size, quality and

sophistication of financial markets, because of changes in the policy

and regulatory environment, the entrepreneurial initiatives of indi-

viduals and institutions, and the availability of trained manpower.

The continuing growth of financial markets is further adding to the

demand for well-trained professionals.

Institute of Financial Markets of Pakistan is dedicated to the profes-

sional development of financial markets and research on financial

markets as well as the well being of financial markets by educating

the professionals about the norms and ethics being practiced in the

markets. IFMP has had a pioneering role in meeting the demand for

educated manpower. It is Pakistan's first specialized institution

devoted to the education and updating of knowledge of manpower

for financial markets. It will provide high-quality educational stand-

ards for all types of financial market participants; investors, bro-

kers, mutual funds, investment banks and policy makers.

The Institute's main activities are (1) Licensing the professionals

working in the financial markets by certifications. The institute’s key

responsibility is to educate the professionals working in different

financial markets of Pakistan through examining their knowledge in

their relevant field of work; (2) Studying the latest developments in

the financial markets in order to discover whether there is such a

thing as an ideal market economy; and (3) Contributing to the devel-

opment of financial markets in Pakistan. By means of these three

activities the Institute seeks to communicate its ideas to the audi-

ence both at home and overseas. The Institute's research is intend-

ed, first and foremost, to be neutral, professional and practical.

Rooted in practice, it aims to contribute to the healthy development

of Pakistani financial markets as well as to related policies by con-

ducting neutral and professional studies of how these markets and

the financial system are regulated and organized and how they per-

form.

The economy is changing all the time. The Institute hopes that, by

responding to these changes positively, it can contribute to the dy-

namic development of the country's financial markets as well as of

the economy itself.


IFMP Activities 03


Awareness session on “Equity, Debt and Commodity Markets” was conducted by the CEO of IFMP.


December, 2016

This article provides a comparison of regulatory

frameworks surrounding Real Estate Investment

Trusts (REITs) in Asia. A total of ten Asian countries,

namely Hong Kong (HK), India (IN), Japan (JP), Ma-

laysia (MY), Pakistan (PK), Singapore (SG), South Ko-

rea (SK), Taiwan (TW), Thailand (TH), and UAE (AE)

are covered in the article. China has been excluded

from the comparative analysis due to existence of

REIT and Quasi-REIT structures (RICS, 2016) and

unavailability of information.

According to the RICS (2016) research report, alt-

hough China offered a REIT-like structure in 2003, it

still lacks a regulatory framework that can be con-

sidered at par with the regulations in Asia-Pacific

countries. As of May 2015, China offered REITs as

well as Quasi-REIT investment instruments. Chal-

lenges such as lack of talent, limited supply of quali-

fying real estate for inclusion in the REIT, double

taxation, and lack of balance between risk and bene-

fits are considered to be major impediments in the

development of a successful Chinese REITs market.

The REIT regulations are still evolving and more

countries are opting to introduce REITs to enable

investors to provide them with an alternative invest-

ment vehicle and to regulate the real estate sector.

Most countries have chosen to closely replicate the

existing regulatory structures in other countries and

have adapted them to their local context.

A glance at the most prevalent REIT regulations in

the Asia-Pacific region suggests that they are very

similar to each other with a few exceptions. It ap-

pears that the countries that introduced REITs later

learned from their regional counterparts and pro-

ceeded to opt for similar regulatory frameworks.

Moreover, since most of the REITs in the Asia-

Pacific region allow foreign investments, it is appro-

priate for them to have comparable regulations to

enable investments from regional investors.

The REIT regulations in Pakistan and India also ap-

pear to be mostly similar. While Pakistan listed its

first REIT is 2015, India will be listing its first REIT

in early 2017. In the United Arab Emirates (UAE),

the Emirates REIT was launched in 2010 and listed

in 2014. It has provided impressive returns to its

shareholders (Emirates REIT, 2016). It also claims

to be the largest Shariah compliant REIT in the

world. Several aspects remain to be addressed in

the regulations surrounding REITs in the UAE.

Table 1 summarizes various REIT regulations in the

above-mentioned countries.

Table 1: Summary of REIT Regulation in Selected

Asian Countries

04 Real Estate Investment Trusts in Asia:

A Comparison of Regulations


December, 2016



Source: EPRA (2010); Helvetic Investments (2012); Al Jazeera Capital (2014); APREA (2014); International Financial Law Review (2015);

Grant Thornton India (2015); SFC (2015); Das and Thomas Jr. (2016); Japan REIT (2016); SECP (2016);

Notes:

#Regulations do not provide insights into many aspects of operations of REITs

1 Issuance of Preference Capital, Bonus Issues, Buybacks etc.

2 No restriction on gearing in Japan

3,4,5,7,8,9,10,11,13,14 Limited restrictions

6Investment in government securities or deposits with scheduled banks with AA rating

12 Permitted with restrictions


December, 2016




December, 2016

15For listed REITs

16Property underdevelopment must not exceed 30% of the Net Asset Value (NAV)

17Maximum 40% can be invested in non-property assets

18Upto 70% of the total NAV

19REITs with 100% foreign share ownership are restricted to certain designated areas in Dubai

20 Distribution of at least 80% of annual net income required

So far, the articles published in previous IFMP newsletters have provided an overview of REITs in general

(October 2016), characteristics of REITs in Asia including Pakistan (November 2016), and regulatory frame-

works that surround REITs specifically in Asia (December 2016). The focus of next month’s article will be

Shariah compliant REITs that are becoming popular and desirable, especially in the GCC, Asia, and Africa.

References

Al Jazeera Capital. (2014). Real Estate Investment Trusts (Reits) [Online]. Al Jazeera Capital. Available: http://www.aljaziracapital.com.sa/report_file/ess/SPE-165.pdf. [Accessed 8 December 2016].

APREA. (2014). Asia Pacific REITs: A Comparative Regulatory & Tax Study [Online]. Asia Pacific Real Estate Association. Available: http://www.aprea.asia/file/Asia%20Pacific%20REITs%20-%20a%20comparative%20regulatory%20&%20tax%20study.pdf. [Accessed 2 December 2016].

EPRA. (2010). Global REIT Survey - Dubai [Online]. European Public Real Estate Association. Available: http://www.epra.com/media/EPRA_REIT_2010_Dubai.pdf. [Accessed 10 December 2016].

Das, P. & Thomas Jr, C. R. (2016). Strategic Development of Reits in India. Journal of Real Estate Literature, 24(1), 105-131.

Emirates REIT. (2016). Timeline [Online]. Dubai, UAE: Emirates REIT. Available: https://www.reit.ae/page/timeline. [Accessed 8 Decem-ber 2016].

Grant Thornton India. (2015). Real Estate Investment Trust (Reit) Regime in India [Online]. Mumbai, India: Grant Thornton India LLP. Available: http://www.grantthornton.in/globalassets/1.-member-firms/india/assets/pdfs/real_estate_investment_trusts_reits_regime_in_india.pdf. [Accessed 9 December 2016].

Helvetic Investments. (2012). Singapore Real Estate Investment Trusts (S-REITs): A 10 Year Success Story [Online]. Helvetic Investments. Available: http://www.helvetic-investments.sg/image/Singapore%20Real%20Estate%20Investment%20Trusts.pdf. [Accessed 9 December 2016].

International Financial Law Review. (2015). Inside China: First Public REIT [Online]. International Financial Law Review. Available: http://www.iflr.com/Article/3480112/Inside-China-first-public-Reit.html. [Accessed 6 December 2016].

Japan REIT. (2016). About J-REITs [Online]. Japan REIT. Available: http://en.japan-reit.com/about_J-REIT/. [Accessed 2 December 2016].

RICS. (2016). Royal Institution of Chartered Surveyors [Online]. Royal Institution of Chartered Surveyors. Available: http://www.rics.org/Global/REITS_China_English_190516_dwl_Research.pdf. [Accessed 6 December 2016].

SFC. (2015). Invesco Asia Limited’s Response to SFCC Consultation Paper on the Draft Code on Real Estate Investment Trusts [Online]. Secu-rities and Futures Commission (SFC) of Hong Kong. Available: https://www.sfc.hk/edistributionWeb/gateway/EN/consultation/openCommentFile?refNo=03CP4&commentRefNo=20. [Accessed 9 December 2016].

SECP. (2016). REIT Regulations 2015 [Online]. Islamabad, Pakistan: Securities and Exchange Commission of Pakistan. Available: https://www.secp.gov.pk/document/reit-regulations-2015/?wpdmdl=712. [Accessed 5 December 2016].




December, 2016

This article discusses some key challenges faced by

Islamic Finance in general and Takaful in particular

that exist globally and have undermined the growth

of Takaful. The article mostly attempts to summarize

the findings presented in academic literature.

Islamic finance overall has suffered due to the lack of

standardization and limited availability of risk man-

agement tools (Jobst et al., 2008), lack of awareness

amongst potential investors (Rammal and Zurbruegg,

2007), and inadequate liquidity and slow innovation

(Zaher and Hassan, 2001). Low levels of awareness

combined with inadequate marketing have further

restrained the growth of Islamic finance products

(Bley and Kuehn, 2004), and Takaful products are

not an exception.

Standardization of Shariah Compliant Products:

With respect to the lack of standardization of Shariah

compliant financial products, Karasik et al. (2007)

argue that Islam prescribes a broad qualitative ap-

proach to business based on justice, equality, and fair

play for all parties involved. All Shariah compliant

transactions are required to be free of riba (interest)

and gharar (excessive uncertainty and risk). Moreo-

ver, the underlying business should be Shariah com-

pliant, based on profit and loss sharing between par-

ties, and must be related to real economic activity.

The authors suggest that different interpretations of

Shariah principles under different schools of thought

have resulted in some challenges for the growth of

Islamic finance in general.

Religious Beliefs and Degree of Awareness: Aca-

demic literature provides evidence that individuals

and institutional investors may not invest in financial

products based on a rational evaluation of the risk

and return. Instead they may aspire to invest in prod-

ucts that are aligned with their religious beliefs and

moral values (McGowan and Muhammad, 2010).

However, this does not always mean that such inves-

tors try to educate themselves enough sufficiently

about the workings of the products that comply with

their belief system. For example, a study by Maysami

and Williams (2006) examined the link between reli-

gious beliefs and use of Takaful products. Not sur-

prisingly, the authors documented a positive associa-

tion between Islamic beliefs and the need for Shariah

-compliant insurance products. The study highlight-

ed two issues for assessing the need for insurance

products: the extent of religious beliefs and aware-

ness. The authors found that while religious conserv-

ativeness contributed significantly to the desire for

Takaful products, this did not necessarily translate

into respondents seeking knowledge about them. In

other words, the study found that the respondents

with highly conservative religious values were less

aware of the workings of Takaful contracts. On the

other hand, respondents with relatively liberal reli-

gious beliefs were found to be more knowledgeable

about Takaful products.

05 Takaful: The Challenges


December, 2016

Another study conducted in the UK by Coolen-Maturi (2013) highlighted that despite the real demand for

Takaful products among Muslims in the UK, the extent of awareness about such products is low. The study al-

so highlighted that customers inclined towards buying Takaful products were comfortable in buying them

from banks that offer Takaful products rather than being approached by Takaful operators themselves.

Regulatory Frameworks: MIFC (2015) suggests that the success of Takaful greatly depends on the regula-

tions governing it. Offering Takaful products in any country requires regulators to develop a regulatory frame-

work that is compliant with Shariah. For example, in Bangladesh, the Takaful is still offered under the Insur-

ance Act 2010, which was developed for conventional insurers (Khan et al., 2016). This of course has caused a

major impediment in the growth of Takaful in Bangladesh. The purpose of the regulatory regime is not only to

ensure adherence to Sharia, but also to safeguard the interest of policyholders and eventually maintain the

integrity of financial markets.

Islamic Financial Services Board (IFSB) and International Association of Insurance Supervisors (IAIS) collec-

tively produced a working paper in 2006 that discussed the regulations surrounding Takaful operators and

products. The paper highlighted that while most regulatory requirements for conventional insurers are appli-

cable on Takaful providers, they are also subject to additional regulations such as formation of a Shariah Advi-

sory Board and regulations related to solvency or insurers’ exposure to unforeseen losses that may be above

and beyond the cooperative Takaful fund. Besides corporate governance, the paper highlighted four key regu-

latory dimensions for Takaful providers: financial and prudential regulation, transparency, reporting and

market conduct, and supervisory review process. The global Takaful regulations incorporate these dimen-

sions and additional locally pertinent regulations.

The regulations surrounding Islamic Insurance have evolved greatly in Malaysia, whereby the regulator enact-

ed several regulations such as Takaful Operational Framework 2012, Islamic Finance Service Act 2013, and

Life Insurance and Family Takaful for Everyone (LIFE) (MIFC 2015). On the other hand, the regulation in the

GCC countries, especially in Saudi Arabia, have mandatory requirements for insurance companies to offer co-

operative insurance. In Pakistan, the SECP produced an initial regulatory framework for Takaful framework in

2005 and then amended it in 2012 and 2014. The latest amendment allowed conventional insurance to offer

Takaful products with strict adherence to Islamic principles.

Competition: The insurance industry is very competitive. Insurance products are rather homogenized



December, 2016

(undifferentiated) and companies can succeed by offering either lower prices of products or by creating differ-

entiation in the minds of the customers. Takaful products are differentiated from their conventional counter-

parts due to the dimension of Shariah compliance. Given that the insurance and Takaful penetration in some

countries is low, the companies can benefit from expanding the pie by creating awareness and capturing mar-

ket share, rather than competing on price. This means that (cooperating with competitors) instead of competi-

tion may be suitable for a nascent Takaful industry in many countries (Fadzullah, 2015).

Marketing: The unawareness of suitability of Takaful products and preference for reputable institutions in

offering Takaful products (Coolen-Maturi, 2013) indicates that Takaful providers have not capitalized on the

differentiated products that they are offering by marketing them adequately. Marketing campaigns with the

central theme of creating awareness may play a positive role in expanding the market share of Takaful compa-

nies. Moreover, such campaigns would help Takaful providers in developing a brand image and reputation for

themselves. The academic literature that compares conventional and Shariah compliant financial institutions

identifies brand image and reputation as key determinants of attracting customers (Dusuki and Abdullah,

2007; Al Mossawi, 2001). It is also important for Takaful providers to evaluate the nature of marketing that

consumers prefer (relationship-based vs. Product-based) and devise their marketing strategies accordingly.

Maturity of Islamic Finance: Sherif and Shaairi (2013) also highlighted that a well-developed Islamic finance

industry in the country has an impact on the demand for Takaful products, as it provides a level of assurance

and confidence to the consumers that they are opting for products that are governed by adequate regulations

and an appropriate code of conduct.

Distribution Channels: The maturity of the Islamic finance industry in a country is also associated with well-

established distribution channels, which improve the accessibility to Shariah compliant products. The accessi-

bility can be measured through network embeddedness, availability of BancaTakaful, number of Takaful

agents, and availability of online and mobile platforms to offer products and manage ongoing relationships

with the shareholders (Jaffer, 2014). This also helps enhance brand awareness amongst potential customers.

Expanding distribution channels may result in higher costs for the Takaful companies; however, it may lead to

greater benefits in the long run. The conventional insurers operating Takaful windows may have an upper

hand in reaching out to consumers due to adequately established distribution channels.



December, 2016

Others: Academic literature also discusses some oth-

er factors that may restrain the growth of Takaful in

different countries. Abdullah (2012) and Sherif and

Shaairi (2013) found evidence that literacy played an

important role in generating demand for convention-

al as well as Shariah compliant insurance products.

The gap between literacy and knowledge of Takaful

can be partially overcome by awareness campaigns

by the regulators and the Takaful operators. Other

than literacy, GDP per capita, income, dependency

ratio, and savings were also all found to be significant

factors in determining the demand of Takaful prod-

ucts in any country (Amin, 2011; Abdullah, 2012;

Sherif and Shaairi, 2013). These factors are relevant

as low incomes and a higher dependency ratio limit

individuals’ capacity to bear the burden of the peri-

odic payments required by insurance products.

The history of Takaful is not very lengthy. The learn-

ing curve has been steep for both regulators and

Takaful providers in different countries. The strate-

gic direction of the industry will become streamlined

as the industry matures. Malaysia and Saudi Arabia

have made significant progress in Takaful and have

set examples for other countries to follow.

References

Abdullah, N. I. (2012). Analysis of Demand for Family Takaful and Life Insurance: A Comparative Study in Malaysia. Journal of Islamic Economics, Banking and Finance, 68(4), 67-86.

Al Mossawi, M. (2001). Bank Selection Criteria Employed by Col-lege Students in Bahrain:

An Empirical Analysis. International Journal of Bank Marketing, 19

(3), 115-25. Amin, H. (2011). Determinants of Islamic Insurance Acceptance:

An Empirical Analysis. International Journal of Business & Society, 12(2), 37-54.

Bley, J. & Kuehn, K. (2004). Conventional Versus Islamic Finance: Student Knowledge and Perception in the United Arab Emirates. International Journal of Islamic Financial Ser-vices, 5. Available at: www.iiibf.org/journals/journal20/vol5no4art2.pdf

Coolen-Maturi, T. (2013). Islamic Insurance (Takaful): Demand and Supply in the Uk. International Journal of Islamic and Middle Eastern Finance and Management, 6(2), 87-104.

Dusuki, A. and Abdullah, N. (2007). Why do Malaysian Customers Patronise Islamic banks?.

International Journal of Bank Marketing. 25(3), 142-60. Jobst, A., Kunzel, P., Mills, P. & Sy, A. (2008). Islamic Bond Issuance:

What Sovereign Debt Managers Need to Know. Interna-tional Journal of Islamic and Middle Eastern Finance and Management, 1(330-344.

Fadzullah, W. M. (2015). Strategic Issues of Takaful Operators [Online]. Cairo, Egypt: International Cooperative and Mu-tual Insurance Federation. Available: https://www.icmif.org/filedepot_download/6223/503. [Accessed 1 December 2016].

Jaffer, S. (2014). Optimising Distribution Strategies for Takaful in the Middle East. 3rd Annual Middle East Takaful Forum. Manama, Bahrain.

Karasik, T., Wehrey, F. & Strom, S. (2007). Islamic Finance in Glob-al Context: Opportunities and Challenges. Chicago Journal of International Law, 7(2), 379-396.

Khan, I., Rahman, N. N. B. A., Yusoff, M. Y. Z. B. M. & Nor, M. R. B. M. (2016). History, Problems, and Prospects of Islamic Insur-ance (Takaful) in Bangladesh. SpringerPlus, 5(1), 785.

Maysami, R. C. & Williams, J. J. (2006). Evidence on the Relation-ship between Takaful Insurance and Fundamental Per-ception of Islamic Principles. Applied Financial Economics Letters, 2(4), 229-232.

McGowan, C. & Muhammad, J. (2010). The Theorical Impact of the Listing of Syariah-Approved Stocks on Stock Price and Trading Volume. International Business and Economics Research, 9(1), 11-21.

MIFC. (2016). Takaful: Growing from Strength to Strength [Online]. Kuala Lumpur, Malaysia: Malaysia International Islamic Financial Centre. Available: http://www.mifc.com/index.php?ch=28&pg=72&ac=154&bb=uploadpdf. [Accessed 25 November 2016].

Rammal, H. & Zurbruegg, R. (2007). Awareness of Islamic Banking Products among Muslims: The Case of Australia. Journal of Financial Services Marketing, 12(1), 65-74.

Sherif, M. & Shaairi, N. A. (2013). Determinants of Demand on Family Takaful in Malaysia. Journal of Islamic Accounting and Business Research, 4(1), 26-50.

Zaher, T. & Hassan, M. (2001). A Comparative Literature Survey of Islamic Finance and Banking. Financial Markets, Institu-tions and Instruments, 10(4), 155-199.


Associate

In relation to-

(a) An individual, means-

(I) That individual's spouse,

son, adopted son, step-son,

daughter, adopted daughter, step-

daughter, father, stepfather,

mother, stepmother, brother,

stepbrother, sister or stepsister;

(II) Any company of which that

individual is a director;

(III) Any company in which that

individual or any of the persons

mentioned in sub-clause (i), has

control of twenty per cent or

more of the voting power in the

company, whether such control is

exercised individually or jointly;

or corporation established by any

special enactment for the time

being in force.

-Securities Act, 2015.

Clearing Facility

A facility for the clearing and set-

tlement of futures contract traded

on a futures exchange.

-Futures Market Act, 2016.

Document

It includes any information recorded

in any form, including documents or

statement of accounts in respect of

customers maintained by financial in-

stitution, through modern electronic

devices or techniques and data or in-

formation recorded in any legible

form.

-SECP Amendment Act, 1997.

Initial Shareholders

The legal owners of the shares of a

stock exchange on the date of corpo-

ratization.

-Stock Exchanges (Corporatization,

Demutualization and Integration)

(Amendment) Act, 2015.

Participant

It means — (a) An account-holder

who is a member of a stock exchange ;

Investors’ Terms Of The Month

and

(b) Any other account-holder who

meets the qualifications of a par-

ticipant prescribed in the regula-

tions:

Provided that such account hold-

ers — (i) Perform services for sub

-account holders in accordance

with the terms of an agreement

entered into between the central

depository and each of the partic-

ipants ; (ii) Transfer any securi-

ties to the central depository to

the credit of any sub-accounts un-

der their respective accounts ;

and (iii) Handle, on behalf of sub-

account holders, the book-entry

securities in the sub-accounts un-

der their respective accounts.

-Central Depositories Act, 1997.

Record

It includes the records main-

tained in the form of books or

stored in a computer or any elec-

tronic device, or such other form

as may be prescribed.

-Anti-Money Laundering Act,

2010.

December, 2016 IFMP Monthly Newsletter 8

06

Business and Economic Newsflash


46% Return Provided by PSX in 2016

The Pakistan Stock Exchange provided total return of

46 per cent in 2016, which put Pakistan in the spot-

light as the best performing market in Asia and the

fifth best among the world markets.

The PSX return of 46% also stood out as the best in

MSCI Frontier Markets and compared favorably with

the PSX average gains of 20% over the past 10 years

and average return of 24% over the last 20 years.

According to brokerage Topline Securities strong per-

formance of equities was mainly led by ample local

cash liquidity on account of falling interest rate and

rising investor confidence. Regardless of booming

market, there was absence of government divestment

of equities in state-owned enterprises and the PSX

witnessed just three private sector initial public offer-

ings which raised Rs.4.2 billion.

OPEC agrees on Oil Output cuts as Saudis

soften stance on Iran

The Organization of Petroleum Exporting Countries is

ditching a pump-at-will policy introduced in 2014 to

resume its traditional role as price fixer. The shift

aimed at draining a crude glut that’s pushed down

prices for two years. This will help revive the tattered

finances of oil-producing countries and will reverber-

ate in markets around the world, from the Canadian

dollar to Nigerian bonds to U.S. shale equities.

“This should be a wake-up call for sceptics who have

argued the death of OPEC,” said Amrita Sen, chief oil

analyst at Energy Aspects. “The group wants to push

inventories down.”

Bids for PIBs Rejected

All bids for Pakistan Investment Bonds (PIBs) were

rejected as bidders sought higher yields on govern-

ment papers amid a low interest-rate era.

According to the SBP, banks and investors made bids

worth Rs.47 billion against the auction`s target of

Rs.50 billion. However, the government rejected all

the bids made for three five and 10-year tenors. Ac-

cording to the director of an investment company,

the government was comfortable with the rates it of-

fered to investors for PIBs, mainly because the ma-

turity was just Rs.2.1 billion.

All bids worth Rs.117 billion were also rejected in the

auction as the government is not ready to borrow at

higher yields. Yields on PIBs have been declining

amid falling policy rate, mainly due to declining infla-

tion.

A recent report by SBP showed that the government

has so far borrowed Rs.1.028 trillion through the

central bank during the current fiscal year. The trend

stands in total contrast to last year`s as the govern-

ment retired Rs.246 billion during the same period of

2015-16.

December, 2016

07

Regulatory Newsflash

54 Show-cause Proceedings Initiated by SECP

The Securities and Exchange Commission of Pakistan issued

54 show-cause notices and concluded 50 current proceed-

ings during October and November against management and

companies` auditors for violations.

It is mandated by the commission to ensure compliance in

areas such as maintenance of websites, inter-corporate fi-

nancing and submission of quarterly reports.

After giving reminders to the companies through the media

to have mandatory company websites providing information

to current and potential investors, the SECP initiated 17 new

show-cause proceedings.

The department concluded 14 proceedings issued for delay

or non-filing of quarterly accounts. The SECP shall not toler-

ate holding back of critical financial information to the

shareholders.

SECP revamps Incorporations

The Securities and Exchange Commission of Pakistan has

revamped operations at its three major offices at Karachi,

Islamabad and Lahore.

A press release issued by the SECP said `Incorporation and

Facilitation Desks` have been established at the company

registration offices allowing incorporation within a day.

This will enable registration of companies on the same day

subject to the condition that the registration documents are

filed under online mode.

Advertising

Expenses

Criteria

Economic Corridor

Implicit Cost

Legal Tender

Non-Disclosure

Promulgation

Quality Control

Securities

Registration of 621 Companies

The Securities and Exchange Commission of Pa-

kistan registered 621 new companies, an in-

crease of 23% as compared to the preceding

year.

Around 85% companies have been registered as

private limited companies, while around 11%

companies were registered as single member

companies.

Four per cent of the companies were registered

as public unlisted, association`s not-for-profit,

and foreign companies.

URDU GLOSSARY

December, 2016 IFMP Monthly Newsletter 11

08

Monthly Review

Gold

10 Grams

Beginning Rs.42,857

Ending Rs.42,600

Change -257

Crude Oil

(WTI)$

Beginning 45.32

Ending 53.62

Change +8.3

KIBOR

(6 Months)

Bid % Offer %

Beginning 5.86 6.11

Ending 5.90 6.15

Change +0.04 +0.04

Foreign Exchange Rates

GBP (£) EURO (€) USD ($)

Buying Selling Buying Selling Buying Selling

Beginning Rs.129.41 Rs.129.66 Rs.110.59 Rs.110.80 Rs.104.40 Rs.104.60

Ending Rs.128.48 Rs.128.73 Rs.110.11 Rs.110.32 Rs.104.60 Rs.104.80

Change -0.93 -0.93 -0.48 -0.48 +0.2 +0.2

Pakistan

Stock

Exchange

100 Index

Beginning 42,622.37

Ending 47,806.97

Change +5184.6

Silver

10 Grams

Beginning Rs.634.28

Ending Rs.634.28

Change 0

Markets In Review


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DETAILS: www.ifmp.org.pk 92 (21) 34540843-44 [email protected]

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