PSX steps up efforts to recover defaulted amount

KARACHI: The Pakistan Stocks Exchange’s (PSX) management has swung into action to recover defaulted amount from the brokerages after the bourse’s new buyer said it would hold some portion of sales proceeds to settle claims, sources said on Thursday.   

A PSX spokesman confirmed that the management is making all-out efforts to recover assets from defaulting holders of trading rights entitlement certificates (TREC), “in coordination with and under the guidance of the SECP (Securities and Exchange Commission of Pakistan).” 

Earlier, the sources said five brokers were declared defaulted after 2008 stock market crisis. The claims against them were estimated at around five billion rupees. Two more brokerage houses were recently added to the list of defaulters. The PSX board decided to settle claims of investors against these brokers by disposing their confiscated assets and properties.  

A Chinese-led consortium said it would hold 20 percent of the sale proceeds against PSX buying for one year to ensure settlement of arising claims against TREC holders. A Chinese-led consortium is to release $85 million as sale proceeds as it bought PSX’s 40 percent strategic stake.   

The spokesman said the PSX will provide maximum relief to the clients of various suspended/forfeited TREC holders. Due to continuous follow-ups by PSX, MAM Securities Private Limited (MSPL) agreed to satisfy all dues/liabilities towards their clients, “as may be determined by PSX from time to time.”

In this regard, the majority shareholder of MSPL requested the PSX for granting time to liquidate their assets to enable them to resolve investors’ complaints. 

The PSX, in consideration of investors’ interest, advised MSPL to furnish guarantee upon which directors of MSPL surrendered original passports and submitted cheques equivalent to amount of outstanding investors’ claims as security till the time they liquidate their assets (including personal assets) and satisfy all liabilities towards their clients.

“PSX, as a frontline regulator, and SECP, being the apex regulator of capital market, are jointly working hard for protection of investors’ interests, creating awareness among investors about their rights and obligations of securities brokers towards them,” a statement said. “It is assured that PSX is cognizant of its role as frontline regulator and making every effort for protection of investors’ interests and to rebuild their confidence.”