ISLAMABAD: Without taking names that would alert the public, the Securities and Exchange Commission of Pakistan (SECP) issued a hard-hitting press release, saying that it has ordered an investigation against some brokers for “market manipulation through misleading trading activity”.
The statement comes a day after the SECP said that it has filed a criminal case against a leading brokerage house. It did not divulge the name of the brokerage house then, either.
The news comes at the heels of a three-day bull run that saw the KSE-100 Index - a benchmark for market performance - gain over 6% due to the announcement of the Panama case verdict.
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Earlier in the year, the SECP also sprang into action after brokers’ defaults were reported with the regulator also cracking down on illegal in-house financing activities.
While amended rules of in-house financing were issued, news of brokers’ defaults nudged the SECP to take action against fraud and market manipulation in affairs of the stock market.
“The SECP has ordered an investigation under Section 139 of the 2015 Securities Act against a few securities brokers for market manipulation through misleading trading activity,” stated the release issued late Saturday night. “The SECP chairman has directed officials to address this issue through aggressive policy measures and ruthless enforcement. The battle lines between the apex regulator of the stock market and the market manipulators have now been drawn.
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“For a number of years, some market manipulators have been defrauding the public through deceptive trading practices. One such practice is entering bids and offers with the prior intent of cancelling them before trade execution, commonly known as spoofing. Another such practice is entering multiple bids or offers to create the appearance of false market activity.”
Three months ago, the statement added, the SECP had tasked the stock market surveillance team with analysing index movement trends to identify those involved in market manipulation through deceptive activity. Detailed analysis of index movements and order placements has highlighted that some securities brokers were most prominent in deceptive trading, it said.
Published in The Express Tribune, April 23rd, 2017.
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