March 27, 2003	Thursday	Muharram 23, 1424

LAHORE, March 26: The Lahore Stock Exchange (LSE) is likely to become the country’s first “demutualized” market in the next few months, if not in weeks, as its management claims to have “almost” done its homework.

“Yes, we’ve completed our in-house exercise for the demutualization of the LSE and obtained legal advice on it. The decision to demutualize the LSE by separating its ownership and trading rights will be formalized in a few weeks by obtaining the approval of the bourse’s general body and board of directors,” LSE managing director and spokesman Samir Ahmad told Dawn here on Wednesday.

Demutualization of a stock exchange means delinking and splitting of the ownership and trading rights. At present, the members simultaneously enjoy the ownership and trading rights.

“I can say that a favourable environment exists for the demutualization of the exchange and both the general body and directors of the bourse would grant their formal approval that will set the process in motion,” Mr Ahmad said. He said the stock exchange would be assisted by the Securities & Exchange Commission of Pakistan (SECP) and the Asian Development Bank (ADB) in completing the process of its demutualization.

The ADB is said to have the required expertise as it has helped several Asian bourses — Singapore, Hong Kong, Philippines, etc., — in their demutualization in the recent past.

The demutualization of the country’s stock exchanges is a precondition for securing the second tranche of the ADB’s Capital Markets Development Programme loan. In a meeting at the SECP last week, the chairmen of the country’s three stock exchanges are said to have agreed with the proposal of demutualization of the capital markets. However, no formal decision was taken at that meeting. It has been left for the exchanges to decide when and how to do it.