AN old racket now faces a new challenge.

The stock market has long been known as a hive of insider trading, front running, wash trades, pump-and-dump schemes and leakage of proprietary trading data of individual brokers against a payment.

But now a new shareholder, in the shape of a Chinese consortium that owns controlling stake in the newly divested stock exchange, wants to instal a Canadian managing director, and is facing stiff resistance from the broker community.

At the same time, a loud and aggressive protest by some brokers against what they allege to be illegal leakage of trade data of buy-and-sell orders of individual Unique Identification Numbers has triggered an investigation from the Securities and Exchange Commission of Pakistan.

The investigation is unlikely to get any further than the last such inquiry conducted a few years ago, leading to a report in 2014 which has been buried ever since.

But the SECP’s inability to get to the bottom of one of the oldest and most deeply entrenched rackets in the stock market does not mean that the new shareholder and management of the PSX will be equally helpless.

Technology provides all sorts of answers to detect such rackets and identify the culprits.

Only the will to pursue the racketeers will be required, and given the new landscape following the historic divestment of the bourse last year, this could well be forthcoming.

The divestment of the bourse is a goal more than a decade in the making, and now that it has been achieved, the real story can begin.

The new owners and the soon-to-arrive managing director should pay careful attention to the politics of the broker community, especially as they revealed themselves in the Oct 24 meeting, which descended into a shouting match as per some reports.

This close attention will help them to determine who stands where in these rackets, and where opposition is likely to originate if and when they press ahead with tackling these rackets.

Plugging the leak of proprietary data should be an important priority for them.

Divestment of the bourse was never meant to be an end in itself.

It was a means towards ending the culture of racketeering that permeates the stock market, and the moment presents a good opportunity for the new shareholders to begin that task. 

Published in Dawn, November 29th, 2017