ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has launched a major enforcement drive, especially in the capital markets, as it seeks to broaden its powers as a key financial regulator.

The SECP took 11 actions for violations, including insider trading and front running, in January and February this year compared to five and eight actions in 2013 and 2014, respectively.

“We take actions against violators irrespective of their strong social or financial standing,” SECP chairman Zafar Hijazi told the media on Thursday. “Among the most prominent cases is a fine against the CEO of a company for buying shares in the closed period.”

Briefing the media, Abid Hussain, the head of Market Surveillance, said that the ‘closed period’ is a time frame when inside information is generated till it is disseminated to the general public. “The fine was imposed on Feb 13, 2015 on the CEO of Al-Abbas sugar mills for purchase of 250,000 shares during the closed period,” he said.

Meanwhile, an SECP official said the charged person has not contested the case in any court of law and deposited Rs100,000 on Thursday.

Out of 20 suspicious transactions detected in February, formal inquiry has been ordered in six of them. The Commission is facing at least six cases in Sindh High Court against its decision over insider trading.

The SECP chairman said that more stern actions are expected against insider trading and other manipulations. “Our only tool for suspicion is transaction, therefore we are planning to strengthen our IT systems for a better monitoring and surveillance.”

The IT system of the SECP currently detects 21 kinds of alerts, such as extraordinary movements of prices and volumes. The commission plans to upgrade the systems to detect 60 categories of abnormal movements during and after trading in the stock markets.

The SECP is pursuing up-gradation of six laws which would make it more effective. Two new laws — the Securities Act 2015 and the Futures Act 2015 — are already in parliament. As per the SECP’s plan, the last law to be presented before parliament will be the companies’ law.

The SECP also plans to tighten the legal framework not only for brokers, but also for analysts, who at times play role in market manipulation. The commission has finalised the ‘Research Analyst Regulations’ which are expected to be floated for public by the end of this month.

Published in Dawn, March 6th, 2015

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