The oft-referred bureaucratic lethargy shown by the management of Karachi Stock Exchange (KSE) led to, an easily avoidable confusion between the front and apex regulators of the country’s stock markets. Wednesday saw the regulators at Securities and Exchange Commission of Pakistan (SECP) rushing to the KSE to brief its annoyed Board of Directors, the elected ones of course, on what the sources said was a “concept paper” with regard to implementation of the years-old proposed “Broker Registration Regime”.
According to well-placed sources, the KSE directors remained ignorant for over a month and a half of the concept paper sent by the SECP to the Exchange for their review and input in the proposed document. The sources said the Commission had sent the paper to the KSE management back in October but the latter had not bothered to share the same with the board members. “The SECP by end-October had sent the paper to KSE management for fine-tuning, but the management sat on it for over a month instead of taking the Board in confidence on the document,” a senior broker confided to Profit on Thursday. The broker said the KSE directors, during their meetings with the SECP officials last month in November, were time and again rendered confused whenever the SECP officials made a reference to the concept paper. “The KSE directors were then totally ignorant of what the SECP officials were talking about,” the broker said adding “The KSE directors were left confused each time the SECP officials quoted clauses of the concept paper.” When members of the board were acquainted with the fact, the broker said, the directors “reacted strongly” and convened an urgent board meeting on Friday, December 2, to discuss the happening.
The broker tended to agree when asked if he deemed the KSE management’s lukewarm response towards the SECP’s reforms-based document was a clear show of the traditional bureaucratic lethargy in Pakistan. “The KSE management should not have withheld the document for so long,” he commented. This, the broker said, made the SECP rush to KSE and brief the directors about the proposed plan. The apex regulator, in a joint statement issued Wednesday, stressed the need for continuing the “consultative process” and adopting a “coordinated approach” in future to ensure implementation of various market reform measures. “The concept paper was sent to the Exchanges for soliciting comments and the regime will be finalised after giving due consideration to the concerns and feedback of the stakeholders,” the statement clarified to the directors. Wednesday’s meeting was told that the “Broker Registration Regime” was designed to improve trading volumes and enhancing retail participation in the stock market. And that the new regime would help the regulators strengthen the market by allowing only fit and proper brokers to operate.
