Brokers not willing to back down
KSE have decided to challenge SECP over changes in the board of directors.
KARACHI:
Members of the Karachi Stock Exchange (KSE) have decided to challenge the Securities and Exchange Commission of Pakistan (SECP) over changes in the board of directors of the bourse.
According to a press release issued by the KSE on Wednesday, members of the exchange have expressed determination to amend the articles of the exchange and resist any move against the proposal of the members of KSE for restructuring of the board and reversal of the discriminatory requirements of the chairman being elected from among non-member directors.
Participants at the informal meeting of brokers rejected the position taken by the SECP. The rejection referred to an announcement made by the regulator on Wednesday which said that the SECP would not approve of any move to reconstitute the KSE board.
The controversy has stemmed from differences between members of the board of directors at the country’s largest exchange. The SECP had reconstituted the KSE board to include four non-members along with five members of the exchange, back in August 2002.
In December 2005, the SECP acted once again, restricting the election of members as chairman of the KSE board.
In a press release issued on Wednesday, the SECP had cited that it has formulated a balanced constitution for efficient and impartial decision making which is in the interests of all stakeholders including the investing public at large.
However, brokers are adamant that the SECP should revert the constitution of the KSE board to its position prior to December 2005.
“Members have decided to amend the articles (of the exchange) to save the market from disaster,” announced the official release.
“So-called professionals have taken over the board,” alleged one member-director. “These non-stakeholders are unconcerned and there is no accountability for their actions,” he told The Express Tribune.
Members also contended that an index floor that brought equity trade to a stand-still in 2008 had been imposed by ‘non-stakeholders’.
“This action caused losses of over Rs2 trillion to the public,” said the member-director. “Surprisingly no inquiry was initiated by the regulators despite these losses,” he added.
Brokers have also alleged that the cost of doing business and administrative expenses faced by brokerage houses have gone up manifold since the SECP mandated changes to their board, while volumes at the exchange have dwindled on the back of successive bad decisions.
A reversion of the constitution to the pre-December 2005 form would allow members of the exchange to be elected as chairman by the general body of the exchange.
However, the SECP has already announced that it will disapprove any move to reconstitute the KSE board.
Differences between the present chairman and members of the KSE board erupted over the proposed margin trading system. Chairman KSE Zubyr Soomro had disapproved the margin trading product, asking members to suggest further measures that would ensure transparency of financiers and limit systematic risks.
Meanwhile, brokers challenge that these concerns have been addressed while The Express Tribune has learnt that the chairman’s apprehensions have remained unanswered.
In two different letters written in response to the current stalemate by the SECP, members have been instructed to address the concerns against the product raised by the KSE chairman.
Published in The Express Tribune, September 3rd, 2010.
Members of the Karachi Stock Exchange (KSE) have decided to challenge the Securities and Exchange Commission of Pakistan (SECP) over changes in the board of directors of the bourse.
According to a press release issued by the KSE on Wednesday, members of the exchange have expressed determination to amend the articles of the exchange and resist any move against the proposal of the members of KSE for restructuring of the board and reversal of the discriminatory requirements of the chairman being elected from among non-member directors.
Participants at the informal meeting of brokers rejected the position taken by the SECP. The rejection referred to an announcement made by the regulator on Wednesday which said that the SECP would not approve of any move to reconstitute the KSE board.
The controversy has stemmed from differences between members of the board of directors at the country’s largest exchange. The SECP had reconstituted the KSE board to include four non-members along with five members of the exchange, back in August 2002.
In December 2005, the SECP acted once again, restricting the election of members as chairman of the KSE board.
In a press release issued on Wednesday, the SECP had cited that it has formulated a balanced constitution for efficient and impartial decision making which is in the interests of all stakeholders including the investing public at large.
However, brokers are adamant that the SECP should revert the constitution of the KSE board to its position prior to December 2005.
“Members have decided to amend the articles (of the exchange) to save the market from disaster,” announced the official release.
“So-called professionals have taken over the board,” alleged one member-director. “These non-stakeholders are unconcerned and there is no accountability for their actions,” he told The Express Tribune.
Members also contended that an index floor that brought equity trade to a stand-still in 2008 had been imposed by ‘non-stakeholders’.
“This action caused losses of over Rs2 trillion to the public,” said the member-director. “Surprisingly no inquiry was initiated by the regulators despite these losses,” he added.
Brokers have also alleged that the cost of doing business and administrative expenses faced by brokerage houses have gone up manifold since the SECP mandated changes to their board, while volumes at the exchange have dwindled on the back of successive bad decisions.
A reversion of the constitution to the pre-December 2005 form would allow members of the exchange to be elected as chairman by the general body of the exchange.
However, the SECP has already announced that it will disapprove any move to reconstitute the KSE board.
Differences between the present chairman and members of the KSE board erupted over the proposed margin trading system. Chairman KSE Zubyr Soomro had disapproved the margin trading product, asking members to suggest further measures that would ensure transparency of financiers and limit systematic risks.
Meanwhile, brokers challenge that these concerns have been addressed while The Express Tribune has learnt that the chairman’s apprehensions have remained unanswered.
In two different letters written in response to the current stalemate by the SECP, members have been instructed to address the concerns against the product raised by the KSE chairman.
Published in The Express Tribune, September 3rd, 2010.