Stock market rackets

Published November 29, 2017

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

Opinion

Editorial

Growth to stability
Updated 29 Apr, 2026

Growth to stability

THE State Bank’s decision to raise its key policy rate by 100 basis points to 11.5pc signals a shift in priorities...
Constitutional order
29 Apr, 2026

Constitutional order

FOLLOWING the passage of the 26th and 27th Amendments, in 2024 and 2025 respectively, jurists and members of the...
Protecting childhood
29 Apr, 2026

Protecting childhood

AN important victory for child protection was secured on Monday with the Punjab Assembly’s passage of the Child...
Unlearnt lessons
Updated 28 Apr, 2026

Unlearnt lessons

THE US is undoubtedly the world’s top military and economic power at this time. Yet as the Iran quagmire has ...
Solar vision?
28 Apr, 2026

Solar vision?

THE recent imposition of certain regulatory requirements for small-scale solar systems, followed by the reversal of...
Breaking malaria’s grip
28 Apr, 2026

Breaking malaria’s grip

FOR the first time in decades, defeating malaria in our lifetime is possible, according to WHO. Yet in Pakistan,...