KSE brokers mull KCCI-like protest

A majority of the members of the Karachi Stock Exchange (KSE) are planning to organise a strong protest against the SECP and FBR as the stock market is recording the lowest turnover because of stringent requirements of both the regulatory organisations, sources told Profit on Tuesday. The brokers have proposed a KCCI-like protest by announcing a country-wide strike at the stock market, said sources, adding the proposal was discussed in the meeting of the board of directors of the KSE on Tuesday. The KSE board, however, deferred the strike proposal and decided to write a letter to the Finance Ministry, Securities and Exchange Commission of Pakistan (SECP) and the Federal Board of Revenue (FBR) with the purpose to warn them of announcing a strike in case the SECP and FBR continued to enforce the tough tax and legal measures, said sources. Sources said that the strong reaction of the Karachi Chamber of Commerce and Industry (KCCI) against the electricity loadshedding had impressed the KSE members and now they were putting pressure on the KSE board and management to adopt the same strategy to get the stock market out of deepening crisis. These days out of 200 members of the KSE, about 120 are functional and a majority of the functional brokers are facing problems in running their offices because of a very low turnover of trading which is the main source of their income. The stock market is recording an average of 20 to 40 million shares turnover, as a majority of the investors and jobbers have disappeared from the market. The SECP and FBR are trying to find out details about the source of income of brokers, investors, payment of tax, assets, expenditures, etc. Recently, the SECP and the FBR have written separate letters to the stock markets managements, asking them to get details from their members about their assets, sources of income, payment of tax, etc., Sources said that the SECP and the FBR are frequently demanding different information from the KSE and brokers, a tendency that had irritated the stock market’s stakeholders and badly hurt the investment sentiment. For example, in 2008, the KSE used to record about 400 to 450 million shares daily, but now this trading volume had dropped below 40 million shares. In 2008, the value of the KSE’s membership was around 145 million rupees, but now nobody is willing to buy the membership even on half the price, fearing penetration of the SECP and the FBR while the market was seeing the lowest turnover.s