KARACHI - The Securities and Exchange Commission of Pakistan and State Bank of Pakistan on Friday signed a Memorandum of Understanding (MoU) on information sharing and decided to establish a joint task force to determine risks posed by conglomeration. The MoU was signed by SECP Chairman, Salman Ali Shaikh and Governor SBP, Syed Salim Raza on behalf of their respective organization. The two institutions agreed to achieve major objectives of consolidated supervision through creation of a joint task force to determine risks posed by conglomeration like, contagion risk, lack of transparency in intra group transactions and liquidity risks arising from asset liability mismatch. The joint task force, terms of reference of which have also been agreed, will address the concerns through the sharing of information collected from the banks and their organizations, within the framework of the respective laws of the two regulators. The two regulators will take coordinated steps for the development of framework and capacity in the areas of credit rating, valuers, surveyors, administrator and liquidators. Fiscal measures would be proposed to both federal and provincial governments for the development of debt capital market in Pakistan . According to SECP press statement, substantive structural changes have been witnessed, in recent past, in the financial markets and in the traditional operators in banking, investment firms and insurance companies. These changes caused by functional integration, diversification and the de-specialization have led to the emergence of financial conglomerates and large financial groups which pose various risks to the stability of the financial markets and also to the group entities. It said that the SBP and SECP were committed to minimizing the risks of group contagion and regulatory arbitrage in financial conglomerates while simultaneously fostering diversification of products and activities. In the current vulnerable times it was felt that the objectives of proper supervision of these financial conglomerates can be better served through greater cooperation and transparency between the two regulators than undertaking any drastic changes, the press statement added.