BUSINESS AND ECONOMIC NEWSFLASH
URDU GLOSSARY
MARKETS IN REVIEW
QUOTES AND JOKES
TERMS OF THE MONTH
VOLUNTARY PENSION SCHEMES IN PAKISTAN
NEWSLETTER MAY 2018
Institute of Financial Markets of Pakistan
The name of the institute has been changed
from Institute of Capital Markets to
Institute of Financial Markets of Pakistan
Contact Us
Address: Park Avenue Building, Suite No. 1009,
10th Floor, P.E.C.H.S Block No. 6, Shahrah-e-Faisal,
Karachi. Tel: +92 (21) 34540843-44
MESSAGE FROM THE CEO
INTRODUCTION TO THE INSTITUTE
IFMP ACTIVITIES
TERMS OF THE MONTH
BUSINESS AND ECONOMIC NEWSFLASH
URDU GLOSSARY
QUOTES AND JOKES
MARKETS IN REVIEW
ARTICLE ON
WHAT IS FINTECH (AND HOW HAS IT EVOLVED)
00 CONTENT
Message from the CEO
Introduction to the
Institute
IFMP
Activities
Article:
What is FinTech (and how
has it evolved)
Urdu Glossary
Quotes and Jokes
Business and Economic
Newsflash
Page: 3 Page: 4
Page: 7 Page: 12
Page: 16 Page: 17
www.ifmp.org.pk 92 (21) 34540843-44 [email protected]
Terms of the Month
Page: 11
Page: 5
Markets in Review
Page: 18
01
Message from the Chief Executive Officer
◊ May 2018 IFMP Newsletter Page 3 ◊
he 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 individuals and institutions, and the availability of trained man-
power. 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 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, profes-
sional and practical. Rooted in practice, it aims to contribute to the healthy development
of Pakistani financial markets as well as to related policies by conducting neutral and pro-
fessional studies of how these markets and the financial system are regulated and orga-
nized 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.
Mr. Muhammad Ali Khan
T
02
Introduction to the Institute
◊ May 2018 IFMP Newsletter Page 4 ◊
The Institute of Financial Markets of Pakistan (IFMP), Pakistan’s first
securities market institute, has been established as a permanent platform to de-velop quality human capital, meet the emerging professional knowledge needs of
financial markets and create standards among market professionals. The Insti-tute 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 convention-
al instruments but also to trade in new and complex financial market products.
◊ FEE STRUCTURE ◊
Candidate Registration Fee Rs.10,000
Examination Registration Fee Rs.7,000
Membership Fee (Annual) Rs.5,000
Study Guide (Hard Copy) Rs.800
◊ EXAMINATION SCHEDULE ◊
Sun, May 27, 2018
Sun, July 29, 2018
Sun, September 30, 2018
Sun, November 25, 2018
PROGRAMMES
LICENSING CERTIFICATIONS INSURANCE CERTIFICATIONS SPECIALIZED CERTIFICATIONS
Fundamentals of Capital Markets Certification
Pakistan’s Market Regulations Certification
Stock Brokers Certification
Mutual Funds Distributors Certification
Commodity Brokers Certification
Financial Analysts Certification
Mutual Funds Basic Certification
Securities and Futures Advisors’ Certification
Programme (Basic and Core Modules)
General Takaful Agents
Certification
Family Takaful Agents
Certification
Life Insurance Agents
Certification
Non-Life Insurance Agents
Certification
Bancassurance Certification
Bancatakaful 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
Fixed Income Certification
◊ May 2018 IFMP Newsletter Page 5 ◊
IFMP Activities 03
IFMP signed MoU with University of Central Punjab (UCP)
IFMP signed MoU with Superior College Lahore
◊ May 2018 IFMP Newsletter Page 6 ◊
IFMP Activities 03
IFMP signed MoU with Bank Alfalah for the capacity building in the area of
Fixed Income Securities Trading and Investments (collaboration with USAID).
IFMP - Insurance Sales Agents Certification Trainings of Adamjee Life Assur-
ance Co. Ltd. Employees
04
◊ May 2018 IFMP Newsletter Page 7 ◊
Article
What is FinTech (and how has it evolved)
Financial Technology has been around virtually as long as the financial services industry itself. But since the econom-ic meltdown of 2008, a new breed of disruptors has displaced traditional ecommerce providers with more efficient services.
When you use PayPal, Apple Pay, Google Wallet or simply your credit card to make an online purchase, you the con-sumer, the ecommerce retailer and the banks behind the money exchange are using FinTech.
When Charles Schwab, TD Ameritrade or Fidelity Investments purchase stocks and the banks settle the securities transactions, that's FinTech.
And when you go online to find the best mortgage rates for that dream home or to refinance the one you're in, that's FinTech.
FinTech defined
Broadly speaking, FinTech (financial technology) is anywhere technology is applied in financial services or used to help companies manage the financial aspects of their business, including new software and applications, processes and business models.
Once considered more of a back-end, data center processing platform, FinTech has in recent years come to be known as the basis for end-to-end processing of transactions over the Internet via cloud services.
FinTech is not new. It's been around in one form or another virtually as long as financial services has. After the glob-al financial crisis of 2008, however, FinTech has evolved to disrupt and reshape commerce, payments, investment, asset management, insurance, clearance and settlement of securities and even money itself with cryptocurren-cies such as Bitcoin.
"Customers now expect seamless digital onboarding, rapid loan approvals, and free person-to-person payments – all innovations that FinTechs made popular. And while they may not dominate the industry today, FinTechs have suc-ceeded as both standalone businesses and vital links in the financial services value chain.
How FinTech can be disruptive
According to Deloitte and the WEB, disruptive forces that have reshaped the FinTech industry include, but are cer-tainly not limited to:
The growth of online shopping, which is expanding quickly at the expense of in-person shopping, leading to the dominance of online, cashless solutions for transactions.
A shifting balance of power that swings from banks and other financial services to those who own the customer ex-perience. Banks are eliminating in-person services and looking to FinTech and large technology companies for other
05
◊ May 2018 IFMP Newsletter Page 8 ◊
Article
ways to engage customers.
New trading platforms that are collecting data to create an aggregated market view and using analytics to uncover trends.
Insurance products, which are becoming more tailored to customers who, in turn, are demanding coverage for spe-cific locations, uses and timeframes. That's driving insurers to collect and analyze additional data about their clients.
Artificial intelligence, which now plays a role in differentiating financial services products as it replaces complex hu-man activities.
Transaction process improvement and middleware, both of which remain expensive. This is pushing traditional fi-nancial services firms to consider partnerships with marketplace lenders for FinTech solutions that don’t require a full infrastructure overhaul.
A new world of regulations
After the 2007-2009 financial crisis, regulators turned up the heat on the larger players in the financial services in-dustry, enabling smaller and more agile firms and upstarts to gain traction. For example, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 created a number of new oversight agencies and represented the largest set of regulatory oversight changes in the financial services industry since the Great Depression.
In addition, companies that provided integration technology, services, data and analytics for banks saw a significant increase in the use of their hosted services, according to Jason Deleeuw, a vice president at Piper Jaffray covering financial and business services companies.
06
◊ May 2018 IFMP Newsletter Page 9 ◊
Article
After spending billions of dollars and thousands of hours to comply with that new regulatory landscape, the
financial services marketplace turned its collective attention to rolling out new products and services. In some
cases, banks became the technology developers. But in most cases, the financial services sector found it far
simpler to outsource the technology for electronic payments or onboarding of customers rather than build it in
-house, Deleeuw said.
For example, online mortgage servicing platforms saw a surge in adoption by banks for processing client ac-
counts.
"They [the banks] are dealing with more regulatory issues around servicing mortgages, so it's becoming more
costly to do this with an internal system," Deleeuw said. "I think it's helped drive banks more toward out-
sourced solutions because of the cost and reduced regulatory risk involved in trying to manage their own in-
ternal systems."
“With increased interest in service-based systems, the technology grew more robust even as the costs of imple-
menting it fell, enabling even further proliferation”
The explosion of ecommerce has created a healthy ecosystem of start-up tech suppliers for the financial ser-
vices, retail and other industries. While cautious, banks in particular are quick to adopt technology that can
create new revenue streams or bring on efficiencies. So they sought help integrating new technologies, such as
peer-to-peer payments, into their massive legacy infrastructure.
Over the past decade, the FinTech supplier ecosystem has grown from 10 or so key players to more than
10,000 companies, according to Piscini. That, in turn, has spawned a new service from Deloitte known as eco-
system relationship management, or ERM.
"The way you manage 10,000 suppliers is completely different from the way you managed 10 technology part-
ners," Piscini said. "That's a big challenge for large organizations: how do you manage your 10,000-supplier
ecosystem versus the 10 relationships you had before. For them, it's not as much about technology but what
kind of innovation can I source and how do I do that in an ecosystem that's much more fragmented than it used
to be?"
05
◊ May 2018 IFMP Newsletter Page 10 ◊
Article
Banks as tech providers
Banks have also become technology providers, competing with the likes of PayPal or Square and sometimes
collaborating on rolling out shared platforms to enable services.
For example, earlier this year Early Warning Services LLC. – a technology provider owned by Bank of America,
BB&T, Capital One, JPMorgan Chase and Wells Fargo – unveiled its new Zelle person-to-person payments ser-
vice. The service platform is expected to be supported by more than 30 banks this year and will let 86 million
U.S. mobile banking customers send and receive payments as an alternative to cash and checks.
07
Terms of the Month
◊ May 2018 IFMP Newsletter Page 11 ◊
Get Yourself Registered!!
Last Date for Registration for 29th July 2018
Examination
6th July, 2018
ANALYST
A professionally qualified and experienced person, normally an
employee of a brokerage firm, an asset management company or
an independent research firm who studies companies, commodi-
ties and capital markets, and makes buy and sell recommenda-
tions on stocks, commodities and financial instruments. Most
analysts specialize either in a specific industry, sector or com-
modity.
ANNUAL REPORT
Yearly record of a company's financial condition. It includes a
description of the firm’s operations, its balance sheet and income
statement.
ARBITRAGE
Profiting from differences in the price of a single security that is
traded on more than one market. Taking advantage of certain
prices in different markets by the purchase or sale of any instru-
ment and at the same time taking an equal and opposite position
in a related market to profit from any small price differential.
ASK
The price at which a broker or dealer is willing to sell a stock,
commodity or any other financial instrument.
AUTHORIZED STOCK
Authorized stocks are the maximum number of shares of stock
that a company can issue. It's specified initially in the company's
Memorandum and Articles of Association, but it can be changed
with the shareholder approval. It is also called authorized shares
or shares authorized.
AUTOMATIC EXECUTION
Any order that is automatically executed by a computer without
any human intervention based on pre-set terms and conditions.
ASSIGNMENT
Assignment is the receipt of an exercise notice by an option writ-
er that requires him to sell (in the case of a call) or purchase (in
the case of a put) the underlying security at the specified strike
price. Assignment occurs when an option holder exercises his
option by notifying his broker, who then notifies the Clearing
System.
AUTOREGRESSIVE
Using past data to predict future movement of market or finan-
cial instrument. As a general application it is using of past data
or variable of interest to predict future values of the same varia-
ble.
AVERAGE MATURITY
The average time to maturity of securities held by a mutual fund
is called Average Maturity. Changes in interest rates have great-
er impact on funds with longer average life.
08
Business and Economic Newsflash
◊ May 2018 IFMP Newsletter Page 12 ◊
Interest rate hiked to 6.5pc, risks mounting
The central bank announced the Monetary Policy Statement with details to justify second increase in the interest
rate during the current fiscal year. In January, the key rate was raised by 25 basis points to 6pc after keeping it
steady for 20 months.
The SBP said the balance of risks to the sustainability of the healthy growth with low inflation has shifted due to de-
teriorating balance of payments and this was due to high petroleum prices and limited financial inflows.
Another reason for this imbalance was the revised fiscal deficit which was 5.5pc GDP as compared to 4.1 per cent
for FY18.
“These twin deficits -- depicting the elevated aggregate demand in the country -- are adversely affecting the near-
term macroeconomic stability,” said the SBP.
The SBP believes that the economic growth is provisionally estimated to achieve a 13-year high level of 5.8pc for
FY18. Concurrently, headline inflation remains moderate and is expected to stay well below the annual target of
6pc.
The CPI inflation remained 3.8pc during the first 10 months of this fiscal year while the food inflation clocked in
1.8pc during this period.
“Contrary to this, average of year-on-year NFNE (non-food non-energy) core inflation during the last two months
has risen to 6.4pc, which reflects the building up of inflationary pressures in the economy,” said the SBP.
The average inflation for FY18 is projected to remain within SBP’s model-based range of 3.5-4.5pc whereas the aver-
age FY19 inflation is estimated to be marginally above the annual target of 6pc, said the SBP.
“Helped by strong growth in major crops and a modest increase in livestock, agriculture sector has not only record-
ed a notable improvement over the last year but also surpassed the annual growth target of 3.5pc per cent,” the
central bank noted.
Meanwhile, industrial sector grew by 5.8pc, primarily because of vibrant construction activity and notable improve-
ment in large-scale manufacturing.
08
Business and Economic Newsflash
◊ May 2018 IFMP Newsletter Page 13 ◊
These gains in the commodity-producing sector along with growing aggregate demand have pushed the growth in
services to 6.4pc, said the SBP.
Keeping in view this strong growth momentum and the upcoming investments in auto and construction allied indus-
tries, the government has set the real GDP growth target of 6.2pc for FY19.
“The assessment of overall macroeconomic picture suggests that this target is ambitious and would critically depend
on managing the growing pressures on the external account while ensuring that average inflation is contained close
to its target in FY19,” said the SBP.
On the external front, the current account deficit widened to $14bn during the first 10 months of FY18, which is 1.5
times the level of deficit realised during the same period last year.
“Despite a strong recovery in exports (year-on-year increase of 13.3pc during July-April period of 2017-18) and a
moderate increase in workers’ remittances (a growth of 3.9pc), the growing imports to support higher economic
activity and the sharp increase in oil prices have pushed the current account deficit to a higher level,” observed the
SBP.
In the absence of sufficient projected financial flows, a portion of this higher current account deficit was managed
by using country’s own resources during FY18. Consequently, the SBP’s liquid foreign exchange reserves saw a net
reduction of $5.8bn to $10.3bn as of May 18.
Reflecting the increasing pressures in the external sector, the rupee has depreciated by 9.3pc against the US dollar
till May 24, said the SBP.
“The near-term sustainability of prevailing higher current account deficit critically depends on the realisation and
further mobilisation of financial flows. The need for deep-rooted structural reforms to improve the country’s com-
petitiveness can hardly be overemphasised for medium- to long-term sustainability of balance of payments,” re-
marked the SBP.
Lawmakers add mild amendments in Finance Act 2018
“The PML-N government in its last budget agreed to introduce only 19 amendments to the Finance Act 2018, with
most of them relating to income tax measures.
Of all the recommendations, 12 are related to income tax measures, four to sales tax and three to federal excise du-
ty. These amendments will come into effect from July 1. However, revised rates of excise duty on cement and ciga-
rettes will come into effect on the next day of assent given by President Mamnoon Husain.
Through the act, the excise rate on cement was further revised from Rs1.25 to Rs1.5 per kg and on all three tiers of
cigarettes by Rs6. However, the health levy on tobacco at Rs10 per kg has been withdrawn through the act.
08
Business and Economic Newsflash
◊ May 2018 IFMP Newsletter Page 14 ◊
In the Finance Bill 2018, government introduced 104 amendments in income tax, 33 in sales tax and federal excise
duty.
The inclusion of meagre amendments in the bill shows either lesser acceptance of the recommendations of senators
and members of national assembly or it may also show the uninterested input given on the budget proposals.
Through the finance act, government introduced five-year plan to reduce rates for small companies in line with re-
ductions for companies. It was decided to bring down rates from 24pc to 20pc by 2023. This decrease will be carried
out by 1 percentage point each year, starting from 2019 when tax rate will be 24pc.
Slight changes were made in the tax slabs of individuals — salaried and non-salaried individuals. To remove the
anomaly, the act has included a provision that all amounts exceeding Rs800,000 be taxed a minimum at Rs2,000.
Instead of enjoying zero tax, a nominal sum of Rs1,000 for individuals in the income brackets ranging from
Rs400,001 to Rs800,000 and Rs2000 for individuals in income brackets from Rs800,001 to Rs1.2 million has been
introduced through the Finance Act, 2018.
As per changes in the tax slabs, people earning Rs50,000 per month will have a net benefit of Rs6,000, while those
earning Rs100,000 will save Rs59,500. In the case of even higher incomes starting from Rs1m per month, tax liabili-
ties will go down by Rs2m per annum — a tax break that can go as high as Rs18.8m if earnings cross Rs8m per
month.
Late filers of income tax returns will not be selected for audit automatically. To discourage late filing, the person
would not be added in the active taxpayers’ list even after filing of the return. However, this will apply from tax year
2018 onwards for which the first active taxpayers’ list is to be issued on the first day of March 2019. Any person who
has filed return for TY17 but did not file or was late, will remain in active taxpayers list for TY18 until February 28,
2019.
To make slight changes in restrictions on non-filers for registration of motor vehicles, and immovable property, the
act clarifies that in case of imported vehicles, the restriction will apply on the first registration only. It may be regis-
tered to non-filers subsequently.
It was further clarified in the act that limitation on registration of immovable property will be applied to properties
having value over Rs5m.
Through the act, tax collected at the import stage from commercial importers has been made minimum tax. It has
provided that minimum tax shall be 5pc of the import value as increased by customs duty, sales tax and federal ex-
cise duty.
Moreover, the reduced rate of 1pc for filers and 1.5pc for non-filers for designated buyers of LNG to import the fuel
on behalf of government has been made available to every person importing LNG. The anomaly in the super tax
over the gradual reduction was clarified.
08
Business and Economic Newsflash
◊ May 2018 IFMP Newsletter Page 15 ◊
In the act, the income from donation was exempted from income tax of Sardar Trust Eye hospital, Lahore, Habib
Univer-sity Foundation, Begum Akhtar Rukhsana Memorial Trust Hospital, Al-Khidmat Foundation, Dawat-e-Islami
Trust.
The exemption on income from export of computer software, IT services or IT-enabled services has been extended
to June 30, 2025 from June 30, 2019. The income deriving from film making was enhanced to 70pc from 50pc. The
tax payable on profits and gains derived by a person from low-cost housing projects has been brought down to
50pc.
The changes introduced in all three taxes, the recovery of tax payable by a taxpayer in connection with any dispute
for which the alternate dispute resolution committee (ADRC) has been formed will be stayed up to the date of deci-
sion by ADRC.
Through the Finance Act, the scope of taxation of resident person was further extended by including income
attributable to a controlled foreign company. The act has further clarified that the attributable income of a con-
trolled foreign entity shall be taxed at the rates applicable on dividend income as provided in Division III, Part I of
First Schedule.
Moreover, in case tax has been paid by the resident person on the income attributable to controlled foreign compa-
ny and in a subsequent tax year the resident person receives dividend distributed by the controlled foreign compa-
ny, after deduction of tax on dividend, the resident person shall be allowed a tax credit.
Through the act, the power to exempt sales tax was withdrawn from federal minister in charge and vested the same
to federal government. The import of micro feeder equipment and fish babies/seedlings has been exempted from
sales tax. The supply of match boxes was also exempted from the sales tax.
On the import and supply of potassium chlorate, a sales tax rate of 17pc along with Rs40 per kg was imposed. How-
ever, the rate of Rs40 per kg will not apply on imports made by and supplies made to organisations under the con-
trol of Ministry of Defence.
The rate of sales tax was reduced to 10pc on rock phosphate if imported by fertiliser manufacturers for use in its
manufacturing.
09
Urdu Glossary
◊ May2018 IFMP Newsletter Page 16 ◊
Facility سہولت
Federal ی وفاق
Finalize حتیمیشکلیدیں
Financing رسمایهیلگانای
Fiscal ی مالیات
Fixed profit مقررہیمنافع
Foreign exchange یملیکیزریمبادلہ غیر
Foreign trade یملیکیتجارت غیر
Forfeiture فارغ
Format شکل
Forward contract یمعاہدہے آگ
Foundation بنیاد
Freedom of expression اظہارییکیآزادی
Functions افعال
11
Markets in Review
◊ May 2018 IFMP Newsletter Page 18 ◊
◊ Monthly Review ◊
Crude Oil
(WTI)$
Beginning 68.56
Ending 68.14
Change -0.42
KIBOR
(6 Months)
Bid % Offer %
Beginning 6.26 6.51
Ending 6.64 6.89
Change 0.38
Pakistan
Stock
Exchange
100 Index
Beginning 45,488.86
Ending 42,846.64
Change -2,642.22
Gold
10 Grams
Beginning Rs. 50,442
Ending Rs. 49,425
Change Rs. -1,017
Silver
10 Grams
Beginning Rs. 651
Ending Rs. 660
Change Rs. 9.0
Foreign Exchange Rates
Interbank Market
GBP (£) EURO (€) USD ($)
Beginning Rs. 157.37 Rs. 140.36 Rs. 115.70
Ending Rs. 154.01 Rs. 134.58 Rs. 115.65
Change Rs. –3.36 Rs. -5.78 Rs. -0.05
Contact Us
www.ifmp.org.pk 92 (21) 34540843-44 [email protected]
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