LAHORE: The Securities and Exchange Commission of Pakistan (SECP) on Wednesday urged the Pakistan Stock Exchange (PSX) to fulfil its responsibility as the front-line regulator of stockbrokers.

The SECP called an urgent meeting with PSX’s board of directors to know about the steps taken to protect investors of M.R. Securities, a Lahore-based brokerage house whose owner has reportedly fled with investors’ money amounting to millions of rupees.

The stock market’s board regretted that information about the default of M.R. Securities reached the relevant PSX directors when the broker had already disappeared.

The board informed the SECP that it would thoroughly investigate if some PSX officials were negligent in discharging their regulatory responsibilities.

The directors also assured the SECP that it would complete the investigation into the matter by Feb 13 and share its finding with the commission by Feb 14. This will be followed by a meeting between the SECP and PSX the same evening to take decisive action.

SECP Chairman Zafar Hijazi told the PSX board that it was unacceptable that some stockbrokers continue to defame the market by defrauding investors.

He said the custody of clients’ assets and other factors that put the investors at risk should be addressed immediately. “We will take decisive action if the PSX fails to shoulder its responsibility as the front-line regulator,” he said.

Mr Hijazialso expressed his disappointment with the role of auditors of stockbrokers who continue to fail in raising red flags. Instead, irregularities in brokerage houses are being identified by investigations through the joint inspection teams and SECP inspections.

Meanwhile, an SECP team remained present in Lahore for collecting and analysing back-office data of M.R. Securities.

The SECP directed the PSX management to immediately inform all affected investors through advertisement in the print media on how to lodge their claims with the PSX against the broker.

Published in Dawn February 9th, 2017