SECP plans committee to ensure equity market growth

KARACHI: Securities and Exchange Commission of Pakistan (SECP) will constitute a committee to take measures to arrest stocks fall and overcome hindrances to equity market’s growth, its chairman said on Thursday.

Zafar Abdullah, chairman of SECP, in a meeting with trading right entitlement certificate holders (TREC) of Pakistan Stock Exchange (PSX), said a task force of two to three people of SECP would be formed to resolve the issues on ‘war-footing.’

“The exchange is on a very sound footing and in case of a growth in market it will be a success both for the stakeholders and the SECP,” Abdullah said in a statement. SECP, just a day before the meeting, ordered a probe into a possible data breach at PSX.

“While taking a serious notice of various complaints received, the SECP constituted a team with a mandate to immediately start the investigation proceeding to identify and curb the sources of such unlawful practices and take necessary corrective and punitive actions,” the commission said in a statement then. But, the commission still prefers measures to check unauthorised data access over penalty right away.

“It is the desire of SECP that pre-emptive controls are in place, which will avoid the need to impose any penalty,” the commission chairman said. He said there is a need of a vibrant brokers’ association of TREC holders, who have a very vital role to directly bring issues into the SECP’s attention.

Earlier, SECP chairman met with PSX Board members, Arif Habib, representing the chairman PSX and You Hang, officiating managing director of PSX. Hang told the meeting about various actions being considered by Chinese stakeholders comprising of various exchanges of China to improve and develop PSX.

Stocks tumbled 19.2 percent since the bourse’s inclusion in Morgan Stanley Capital International (MSCI) emerging market (EM) index in June, whereas MSCI EM Index recorded a substantial rise of 12 percent during the period. Consequently, MSCI slashed Pakistan’s weightage to 0.081 percent from 0.14 percent in its emerging market index.

Analysts attributed stocks fall to foreign outflows of $178 million since the reclassification. Market was expecting passive flows of approximately $300 million as a result of the upgrade. But, political instability and external account challenges caused outflows of foreign portfolio funds, the analysts said.

Habib enumerated various issues which are contributing to decline of capital market and expressed his confidence that SECP would be able to resolve these issues, “as its chairman has past extensive exposure to capital market.” “Capital market improvement is in the interest of government as well as other stakeholders to boost economic activity,” he added.