KARACHI: Five years ago, it would have been insane to talk about cross border listing of stocks. Indian market was much too big and Sri Lankan, much too small.

There are people at the market who would whisper to you that a delegation of stock brokers had proceeded to Bombay (now Mumbai) stock exchange in an attempt to investigate the possibility and received as cool a response as ice. But the ice has begun to melt and the idea is being revisited at various forums of the SAARC region. It has also been debated in various meetings of the South Asian Federation of Exchanges (SAFE).

But smaller of the bourses are showing more enthusiasm then the bigger ones. Pakistani stock market that was valued at $5 billion until the recent bull run began, was no larger than the combined market capitalization of a few of the largest Indian listed companies and mutual funds, such as Unit Trust of India (UTI); Reliance Insurance, ICICI and Hindustanlever. But the market capitalization of the KSE has just hit $23 billion, almost qualifying it to be included in the Morgan Stanley Composite Index (MSCI). The Pakistani market can no longer be ignored.

But cross border listing is still a subject of debate with its implementation not reckoned to be near at hand. Progress is said to have been made with some middle eastern countries on mutual listing of securities. But with India, for instance, many issues need to be settled first. At the South Asian Federation of Accountants (SAFA) conference last year, the then President of the Federation, Ashok Chandak of India, said it was much too early to talk about cross border listing because of nonavailability of enough research on companies listed in other countries of the region.

The chairman, Karachi Stock Exchange, Arif Habib believes that things, such as research on companies are secondary issues. He observes that cross border listing is a question that is being seriously looked into. But he says that to realise such a dream, it would be necessary to provide "enabling environment". The Central Bank, for instance, would have to take some steps towards modifying the foreign exchange regime. As the current law stands, portfolio investment in another country is prohibited.

He said that in this respect, the Mutual Fund Association of Pakistan, has suggested that a part of funds of a mutual fund be allowed to be placed in portfolio investment abroad. The regulatory authorities-SECP and SBP-would have to set up a regulatory mechanism for cross border listing of equities. Does all of that suggest that cross border listing is still a distant dream?