KSE: SECP approves regulations for market makers

Regulations expected to address reduced investor profits, volatility in share prices.

ISLAMABAD: In line with international best practices and to promote liquidity in the capital market, the Securities and Exchange Commission of Pakistan (SECP) has approved regulations for market-makers for the Karachi Stock Exchange.

Market-makers play an important role in the capital market by promoting liquidity in relatively less liquid securities by buying and selling these securities in return for a bid-ask spread. The agreement is a key document agreed upon and signed by the market-maker and the corresponding exchange in which the market-maker undertakes the performing of market-making activities.

These regulations are expected to address reduced investor profits, volatility in the share prices and the presence of unofficial market-makers who may cause losses to investors. Initially, market-making has been allowed in all markets, except the ready market.

Published in The Express Tribune, December 15^th, 2010.