KARACHI (July 16 2005): The Securities and Exchange Commission of Pakistan (SECP) has declared Karachi Stock Exchange (KSE) decision for removing cap on COT financing as “null and void, without any validity in law whatsoever”.
The stock market regulator on Thursday night issued a letter to KSE, which said: “We note with concern that, in the course of the meeting, which even otherwise was not warranted in the circumstances, the board unilaterally, improperly with mala fide intention and without lawful authority took decision in respect of COT financing which are arbitrary, unjustified and in gross violation of the directives issued by the Commission from time to time.”
The directives issued by the SECP were, “not to amend the list of shares eligible for COT financing without the prior approval of the Commission”.
“A time-bound action plan for the phase-out of COT financing, in pursuance of which the number of scrips eligible for COT financing was reduced to 7.”
“The KSE to cap the COT financing at Rs 12 billion and to allow it only in the seven scrips named therein.”
The SECP said, “The blatant violations of the aforesaid directives on the part of the board as well as other decisions in meetings held in the recent past are contrary to the policy and commitments made by the board in its own earlier meetings. These violations negate, derail and reverse the agreed upon process of reform of the capital markets and severely compromise and damage the risk management measures instituted for the protection of the interests and confidence of the investors.
“The Commission hereby puts the members of the Board on notice that in the event of any omission on their part, which constitutes a violation of any provision of the law, rules, regulations and directives applicable to them or to the Exchange, the Commission shall forthwith initiate action against them, either jointly or severally in accordance with law.”