August 6, 2002	Tuesday	Jamadi-ul-Awwal 26,1423

ISLAMABAD, Aug 5: The securities market in Pakistan has performed better than any other securities in the world due mainly to a sound regulatory mechanism now in place, Khalid A. Mirza, Chairman, Securities & Exchange Commission of Pakistan stated here on Monday.

He was answering questions about the SECP’s policies at a press conference held at the SECP office to release the third of a series of investors’ guides. Shahid Ghaffar, Commissioner (Securities), was also present.

When his attention was invited to the view that the SECP’s actions had resulted in the current bearish trend witnessed in the stock market, he pointed out that, contrary to negative perceptions of some elements, the KSE-100 Index had gone up by 40 per cent in a year. This was the performance unmatched by any other stock markets of the world, Mirza contended.

While the S&P of the US had gone down by 11 per cent, Bombay Stock Exchange by 12% and Malaysia by 17%, the decline in Pakistan capital market had been of only 1.2%, he observed.

Contrary to the criticism levelled by vested interest, he further stated, the seemingly bearish trend denoted stability as evident from the fact that the badla rate had stabilized at around 3 per cent. This also showed that the investors were now more prudent and discriminating in their behaviour, thanks to the greater transparency in the market.

These conditions also belied the contention that the SECP was moving too fast, the SEC chief stated. Moreover, it had not taken a single regulatory step in the last six months. The only exception was the SECP’s directive against the stockbrokers becoming members of the listed companies’ board of directors.

This move had been supported by overwhelming majority of stock brokers who found themselves disadvantaged viz-a-viz their more resourceful colleagues entrenched in the managements of listed companies. This created a perception of insider trading and served as an impediment in inflow of investment — both foreign and domestic.

Mirza, however, pointed out that the stockbrokers were allowed to remain on the boards of directors of the companies until the next elections.

Responding to a question about his recent meeting with the directors of Karachi Stock Exchange, he said he had urged them to de-mutualize the stock exchange and let it function as a listed company in order to ensure that the stock market in Pakistan operated fairly and transparently.

Out of leading 56 stock exchanges in the world, he observed, 44 had been de-mutualized.

He referred to Australia where all the five stock exchanges had merged and de-mutualized.