Pakistan as GIPS Country Sponsor
In its recent meeting in Hong Kong, the Global Investment Performance Standards (GIPS) Executive Committee voted to acknowledge the CFA Association of Pakistan as an official sponsor of the Global Investment Performance Standards, or GIPS® standards, for the Pakistan market. The GIPS standards are well-recognized with high compliance levels amongst key financial centers in the United States, Canada, Europe, Africa and Asia Pacific.
Administered by the CFA Institute Centre for Financial Market Integrity, the success of the GIPS standards is the result of an alliance of sponsors with experts from a variety of fields within the global investment industry across Europe, North America, Asia-Pacific, and Africa. These key industry groups contribute significantly to promoting and developing the GIPS standards. The CFAAP is the 28th group to join this alliance.
Based on the principles of fair representation and full disclosure, the GIPS standards provide an ethical framework for the calculation and presentation of investment performance for investment management firms. The GIPS standards benefit two main groups: 1) investment management firms and 2) their current and potential investing clients (including the investment consultants whose job is to evaluate, supervise, hire, and dismiss investment management firms on behalf of those clients).
Global standardization of investment performance reporting gives investors around the world the additional transparency they need to compare investment managers and allows managers to compete for new business in foreign markets
Progress on Implementing Codes of Conduct
Over the past several years CFA Association of Pakistan has been diligently working towards improving the standard of Pakistan’s capital markets. One of the key objectives of CFAAP has been to make an impact in the area of advocacy by promoting the global best practices prescribed by CFA Institute and CFA Centre in the areas of code and ethics, professional standards, etc. This is the area which has been the key focus of CFAAP during the past one year.
A recent major break through in this regard was the introduction of the draft codes by the Securities and Exchange Commission of Pakistan (SECP). SECP invited comments from the general public on two separate drafts of codes of conduct. The first one relates to Analysts and the second to Asset Managers and brokerage houses.
The draft Codes are primarily based on the CFA Institute’s Asset Manager Code of Conduct and Research Objectivity Standards, and set out minimum standards for analysts, asset managers and brokerage houses in various areas. These include duties of due care, skill and diligence, qualification, adequacy of resources and procedures, information exchange with clients and its disclosure, compliance and controls and responsibilities of management.
Progress on Analyst Certification Program
SECP has also announced its intention to start certification exam requirement for fund managers, analysts and brokers which will be predominantly based on CFA examination. This is a great breakthrough that CFAAP’s Advocacy team has managed to achieve, after constant lobbying with the SECP for more than two years. A phase-wise implementation approach for the Analyst Certification Program will be followed by the Commission.
To further assist SECP with the implementation guidelines, CFA Association of Pakistan (CFAAP) hosted focus groups with Analysts, Brokers and representatives from Asset Management Companies. The feed back from the focus groups, on the development of implementation guidelines, will be provided to SECP for further action.