LAHORE (July 09 2003) : With a view to broadening investors' base, the Lahore Stock Exchange (LSE) has planned to offer associate membership rights to all the financial institutions, including banks, fulfilling the laid down criteria.
“Our offer will be more attractive and broad-based, and the idea behind is to open up the market for the potential investors, so as to enhance the participation of financial institutions,” said Samir Ahmed, Managing Director and Chief Executive of LSE, while talking to Business Recorder.
To a question, he said that the Karachi Stock Exchange (KSE) has offered four memberships rights to banks and financial institutions, while LSE will have no restriction of number.
LSE scheme is more broad-based and attractive, he pointed out.
About eligibility and criteria, he said under the proposed plan, the financial institutions with a minimum paid-up capital of Rs 200 million and regulated either by State Bank of Pakistan (SBP) or Securities and Exchange Commission of Pakistan (SECP) will be eligible to apply for the associate membership rights.
The Board of Directors of the LSE has already approved the plan, and now the matter will be placed before the Extra Ordinary General Meeting (EOGM) of the exchange for approval.
To open up the associate membership to all financial institutions without any restriction of number, there is a need to amend the Articles of Association of the Exchange, therefore, it requires approval of the EOGM, he explained.
After the EOGM approves, the matter will be referred to the SECP for approbation, he stated.
The LSE MD further said that besides banks, all financial institutions, including modarbas, leasing companies and mutual funds, etc having a minimum capital of Rs 200 million and regulated either by SBP or SECP will be eligible to apply for the associate membership rights.
Currently, there are two associate members of the exchange, which are Pakistan Stock Market Fund and Pakistan Income Fund.
Earlier the associate members could do only badla trading while under the new scheme, they will be able to do all kinds of trading but they will have no ownership rights, he explained.
They will pay higher charges than the regular members and will not serve as broker or agent.
Moreover, they will have only trading rights, the MD said.
As in the next few years more mutual funds are expected to be listed in the stock market, therefore, offering membership rights to banks and financial institutions will be the most significant development in the history of the capital market of the country, Samir Ahmed said.