In 1991, the secondary market was opened for foreign investors on an equal basis with the local investors. This measure along with the government policy of privatization has resulted in rapid growth of the market since 1991. It may also be mentioned that "privatization" has bee n adopted as a philosophy and most of the business & finance activities which were previously reserved for the public sector have now been opened for the private sector. The change of policy is most visible in the financial sector where a number of commercial banks, investment banks, discount houses, leasing companies, modarabas, life insurance companies and mutual funds have been allowed in the private sector.
Liberalization policy has led to rapid deregulation of the national economy and the impediments to private initiative have been speedily removed. Foreign exchange holdings and transfers have been liberalised, industrial sanctioning has been done away with except for few sectors where, for strategic reasons, prior permission of the government is necessary.
The securities market and the corporate sector are regulated by the provisions of the Companies Ordinance 1984.
The Securities and Exchange Ordinance 1969 and Rules framed there under in 1971.
The Securities & Exchange Commission Act 1999.
There are also Federal legislations relating to specific areas like
- Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970.
- Investment Companies and Investment Advisors Rules 1971.
- Modaraba Companies and Modaraba (Flotation and Control) Ordinance, 1980.
- Companies (Issue of Capital ) Rules 1996.
- Leasing Companies (establishment and Regulation) Rules 1996.
- Asset Management Companies Rules 1996.
- Insurance Companies Ordinance 2000.
- Guidelines for insiders trading.
In addition to above, the listed companies are also subject to the PSX Regulations prescribed under Rule Book of the Pakistan Stock Exchange Limited (formerly: Karachi Stock Exchange Limited).