Risk management system at stock market efficient: SECP

Published March 14, 2020
KARACHI: Stockbrokers monitoring share prices at the Pakistan Stock Exchange on Friday.—AFP
KARACHI: Stockbrokers monitoring share prices at the Pakistan Stock Exchange on Friday.—AFP

ISLAMABAD: After assessing situation at the stock market in Karachi on Friday, senior officials of the Securities and Exchange Comm­ission of Pakistan (SECP) observed that its risk management system was functioning efficiently and margins were being collected timely.

During a meeting, heads of the Self Regulatory Organisations (SROs) — which include the Pakis­tan Stock Exchange, National Clea­ring Company and Central Depo­sitory Company — told the SECP officials that their business continuity plans and disaster recovery set-up were in place as per the commission’s earlier instructions.

The SECP team that visited the stock market in Karachi was led by its chairman Amir Khan and included Shauzab Ali, commissioner of securities market division.

At the meeting it was noted that index-based market halts were triggered three times in the outgoing week, but the cooling-off period gave an opportunity to the investors to align their trading strategies and for collection of margins by the clearing company.

The SECP chairman underlined the need for conducting drills to ensure remote operation of trading, clearing, settlement and custody services while allowing remote access to participants to the systems in case onsite operations or physical access was impacted.

Mr Khan advised the SRO heads to remain vigilant, continue to provide uninterrupted access to market participants and ensure effective risk management while maintaining active engagement with their boards of directors and committees for close coordination.

Meanwhile, at a meeting presided over by Prof Khalid Mirza the SECP Policy Board lauded the steps taken by the commission and the Pakistan Stock Exchange regarding suspensions of trading during the turbulent week.

“The practice of index-based market halts at the PSX was successfully implemented as per international best practice (under which) once the KSE-30 Index mov­es four per cent either way for more than five minutes (there’s a break), enabling market participants to cool off, settle margins, regroup etc,” Prof Mirza said.

The policy board discussed the response of National Accountability Bureau to the commission’s letter regarding transfer of cases and matters related to SECP officers working with NAB. The board decided to take legal advice on the matter, particularly about interpretation of the terms “full and complete assistance” used in NAB’s governing statute with respect to what the bureau could require from anybody.

Published in Dawn, March 14th, 2020

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