KARACHI, Nov 26: The Karachi Stock Exchange intends to initiate a process of special audit of stock brokers for which 15 brokerage houses have been selected as the first to go under the microscope.
The KSE informed the members that audit has been designed to provide a ‘level-playing field’ and check compliance of the stock brokerage houses with regulations in the following matters: (a) that members have complied with regulations for Universal Identification Number (UIN); (b) that members have complied with Internet Trading Guidelines 2005 and (c) that as per KSE’s general regulations, proper segregation of assets has been maintained between members and their clients.
The 15 brokerage houses (out of possibly the 170 active brokers) have been selected for the audit through ballot.
“The brokerage houses presently selected will be individually advised with respect to time-frames,” says Mohammad Yacoob Memon, the deputy managing director, adding: “However, the process of audit is expected to commence next week.”
Following the completion of audit of those 15 brokerage firms, the scrutiny of others would follow.
Analysts said the audit exercise could be a prelude to demutualisation of the exchange. But the fact that front-line regulator has itself opted to open accounts of its members for audit is a step in the right direction.
Done fairly and undertaken by reputed audit firms, the exercise could help develop confidence of local and foreign investors in the integrity and transparency of the market.
