PHOTO: AFP
KARACHI: As the Pakistan stock market continues to advance rapidly, all is not well on the trading floors of the exchange as a second brokerage house has been declared a defaulter in just a couple of weeks.
“All clients of ... AWJ Securities (Private) Limited are requested to submit their claims,” Pakistan Stock Exchange (PSX) Acting Chief Regulatory Officer M Abbas Mirza announced in a notification on Thursday.
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Earlier, the National Clearing Company of Pakistan Limited (NCCPL) and Central Depository Company of Pakistan - the two important stakeholders that share responsibility for protecting investor funds - suspended transactions in the brokerage firm's accounts on January 30, 2017.
NCCPL usually blocks activity in the accounts of brokerage houses for failing to provide the required amount to settle trades and restores them when they clear the dues. This whole exercise - from suspension to restoration - takes days and weeks.
Islamabad-based AWJ Securities was declared defaulter after it failed to respond to stakeholders concerned (ie NCCPL) and regulators since January 12, 2017.
A broker-member on the PSX board said AWJ Securities, owned by former chairman of the then Islamabad Stock Exchange (now integrated into PSX), Abdul Waheed Jan, was among weak survivors of the 2008 mega stock crisis. “He [Jan] was one of the 2008 defaulters,” he said.
A couple of weeks ago, Lahore-based MR Securities was declared a defaulter after its owner Mazhar Rafiq disappeared with investor money. PSX has received claims worth Rs1.2 billion against the firm and more are awaited.
The board member, however, was of the view that many claims may remain unsettled as most of the claim-filers were not stock investors. “They handed over their money to Rafiq on verbal guarantees that they would get it back with 100% return,” he said.
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The defaults emerge at a time when PSX is repeatedly making and breaking all-time high records.
PSX was the best performing Asian market in 2016 and its benchmark KSE 100-share Index crossed the 50,000-point threshold in late January.
Including the two fresh defaults, seven PSX members have been declared defaulters since the 2008 crisis.
Published in The Express Tribune, February 17th, 2017.
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