Pakistan

In-House Financing: SECP warns against illegal activities

SECP recommends KSE to use approved products as provided under the Securities Rules, 2011.

April 02, 2011 Less than a minute read

KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has advised brokers to refrain from indulging in prohibited practice of in-house financing.

In a communique to the Karachi Stock Exchange (KSE), SECP recommended them to use only approved products as provided under the Securities (Leveraged Markets and Pledging) Rules, 2011 and applicable law, while extending or arranging financing for clients or investors. SECP further said that the basic essence of introducing margin financing and margin trading products in the stock market is to enhance liquidity, transparency and provision of a level-playing field for all investors and clients, thereby discouraging outlawed practices like in-house financing which is discriminatory and brings greater market risk. In compliance with the SECP’s statement, KSE has asked its members to ensure and comply with the rules.

Published in The Express Tribune, April 2^nd, 2011.