KARACHI (March 05 2003) : Members of the Karachi Stock Exchange (KSE) on Tuesday have decided to challenge the establishment of Electronic Stock Exchange in the court, allowed by the former chairman of the Securities and Exchange Commission of Pakistan (SECP) before leaving his job.
During an informal meeting on Tuesday at the KSE, the members had one-point agenda to annul the decision of allowing opening of fourth stock exchange in the country and termed it favouritism and contrary to the SECP plan of demutualisation of the exchanges.
Most of the members were of the opinion that the decision taken by the former chairman of the SECP was not transparent and the authorities without public debate has decided to allow a private company to establish an Electronic Stock Exchange.
A leading member of the stock exchange urged the senior members that it was simply a case of 'prima face' and should knock the doors of the court to abolish the licence.
He said the decision of the former chairman was taken in haste and negated his own policies. He said before leaving the country he was holding a seminar on demutualisation and brain storming the market punters to have one stock exchange in the country.
Moreover, to make the exchanges more efficient the SECP wanted to introduce National Clearing System.
He said that the stock exchange has fulfilled all the conditions prescribed by the Asian Development Bank (ADB) to make the exchange at par with the international standards.
The SECP to fulfil the conditions of the ADB has appointed independent managing director, cut short the strength of brokers as directors in the management, introduction of T+3 system and capital adequacy ratio.
He said in the past, the investors community wanted to increase the number of stock exchanges in the country and suggested opening of the bourses in Peshawar and Quetta, but the regulator refused the proposal on the grounds that they wanted to have fewer stock exchanges in the country with efficient and transparent mechanism.
The licence to PEX Limited to open the exchange negates the policies of not only the regulator, but the donor agency also.
One of the participants said that the IT Department has made strenuous efforts and made the trading system proficient and now the members could execute business from their corporate offices outside the building of the exchange as they have introduced the remote capability.
The only difference between the present stock exchange and electronic stock exchange was that the company would provide 24 hours of trading.
If the SECP allowed the KSE they could built the same system to help in providing more trading hours.
He said that the AKD Securities has introduced online trading system which was already catering to the demands of upcountry and overseas investors and those who were reluctant to visit the stock exchange but wanted to do share business.
A leading member of the KSE said the presentation made at the SECP was for the Electronic Communication Network (ECN) but the decision was announced for setting up of an Electronic Stock Exchange (ESE).
He said the step taken by the SECP's former chairman was not a transparent one and they failed to follow a proper procedure to set up a parallel exchange.