Business

Breaking rules: KSE suspends Aziz Fida Husein and Company

Order will make accounts inaccessible for 14 days, followed by suspension of certificate.

Kazim Alam July 17, 2015

Company stats: 2,000 is the number of company’s clients. Rs125m is the value of clients’ assets which were used by the company without authorisation. PHOTO: AFP

KARACHI:

The Karachi Stock Exchange (KSE) has suspended all the trading terminals of Aziz Fida Husein and Company, a Karachi-based brokerage, with immediate effect.

KSE Chief Compliance Officer Abbas Mirza suspended the operations of the brokerage house on Thursday after it failed to comply with KSE regulations related to the segregation of clients’ assets.

Under the prevailing rules, brokers must ensure that the assets belonging to their clients are kept separated from the assets of their own. Each broker is required to maintain a separate bank account for all the fund deposits of its clients along with record/breakdown of clients’ balances.

The order will make house and sub-accounts inaccessible to Aziz Fida Husein and Company for the next 14 days. It will be followed by the suspension of the trading right entitlement certificate for the brokerage house by the KSE in case it fails to come clean in the next two weeks.

Speaking to The Express Tribune, a source privy to the development said the amount of unauthorised use of clients’ assets by Aziz Fida Husein and Company was around Rs125 million as on June 30.

The number of clients of Aziz Fida Husein and Company is estimated to be in access of 2,000.

In a separate development on Thursday, the KSE Chief Compliance Officer put three brokerage houses under regulatory restriction. Azee Securities, Darson Securities and Live Securities will not be able to open new accounts until further notice.

The recent wave of orders against brokers by the compliance wing of the KSE has alarmed the brokerage fraternity, as they believe their ‘victimisation’ can drive investors away from the stock market.

The brokerage houses put under restrictions were found to be in regulatory non-compliance when the KSE inspected their operations recently.

Published in The Express Tribune, July 17^th, 2015.

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