Financial Market Development Activity Quarterly Progress Report (Apr – June 2018)

The report was prepared by USAID Financial Market Development Activity. The report outlines key deliverables achieved in fixed income markets training, provincial debt management, Anti-Money Laundering (AML) technical support activities, private equity markets advocacy, and Electronic Warehouse Receipt (eWR) system-related institutional outreach. The Financial Markets Development (FMD) team revised the Year 3 workplan, as per USAID request in May, and obtained approval of the modified work plan in early July. FMD held five fixed income trainings during the quarter, training over 200 industry professionals and students. These trainings aimed to enhance sophisticated portfolio management and risk analysis by market participants. The FMD technical team provided three tailored capacity building sessions to senior officials of the Khyber Pakhtunkhwa province's Finance Department on sub-national debt management. FMD assisted the Finance Department of the Khyber Pakhtunkhwa province in developing a comprehensive debt database, enabling them to effectively manage their cash flows and establish accurate fiscal estimates for debt service expenditures. The FMD team also supported the initial development of the KPK Government's medium-term debt strategy, which will improve the KPK's Finance Department's ability to set sustainable debt levels and incorporate sound risk mitigation techniques. FMD's AML advisor, Marc Alix, developed an AML/CFT Risk Assessment Toolkit for the Securities Exchange Commission of Pakistan (SECP). The toolkit includes self-assessment worksheets, helping the SECP and its regulated entities better align risk assessment and compliance reporting with international best practice. FMD's senior expat eWRS advisor, Dr. Andre van der Vyver, completed the design proposal for the anticipated Maize Pilot, including a detailed review of current maize warehousing systems and needs for digitizing the warehouse receipts and agri-collateral financing process. Task 1 of the report focuses on supporting the Government of Pakistan (GoP) in creating an enabling environment for the development of capital markets. FMD obtained SECP's principal approval to reconsider a number of regulatory reform recommendations in Year 2. The approval and implementation of FMD's proposed regulatory reforms require legislative drafting of formal provisions for a number of key recommendations. FMD targeted advocacy to help facilitate effective stakeholder engagement in efforts to remove distortive prudential and securities regulations. FMD held a series of meetings and discussions with key stakeholders, including the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP), to facilitate effective stakeholder engagement in efforts to remove distortive prudential and securities regulations. FMD also provided technical support to the SBP and SECP for the establishment of reliable Bond Pricing Valuation Methodology. Task 2 of the report focuses on assisting the Government of Pakistan (GoP) in improving market operations. FMD provided technical support to the SBP and SECP for the establishment of reliable Bond Pricing Valuation Methodology. FMD also collaborated with the SBP to design and develop a web portal promoting access of non-bank institutions and retail investors to tradable government debt securities. FMD's quarterly progress report highlights key accomplishments achieved during the quarter under review, including the completion of the design proposal for the anticipated Maize Pilot, the development of an AML/CFT Risk Assessment Toolkit for the SECP, and the provision of technical support to the SBP and SECP for the establishment of reliable Bond Pricing Valuation Methodology.