LAHORE, July 11: Acting on a Securities & Exchange Commission of Pakistan (SECP) directive, the Lahore Stock Exchange (LSE) board of directors on Thursday unanimously decided to reverse its earlier decision to abolish service charges and reduce members contribution towards the Members Contribution Fund (MCF).

LSE managing director Samir Ahmad told Dawn after a meeting of the directors that none of the members had opposed the SECP directive nor did anyone declared it to be an “assault” on the autonomy of the exchange. “All the members were unanimous in their opinion to reverse the earlier board decision and restore service charges and members contribution towards the MCF,” he added. He said the decision would be implemented from Friday.

The SECP had directed the LSE to reverse the decision by July 12 as no such decision could be taken by the stock exchange without prior permission of the commission.

While the abolition of service charges of Rs3.75 per Rs100,000 had deprived the bourse of about 25 per cent of its total annual revenue, the reduction in the members contribution towards the MCF from Rs5 per 100,000 to Rs3.75 per 100,000 had adversely affected the Investors Protection Fund (IPF). Some 15 per cent of the MCF goes to the IPF.

As of June 30, 2001, the MCF and the IPF have the balances of Rs111.129 million and Rs16.65 million, respectively. Furthermore, the LSE had unfunded exposure of Rs120 million against cash reserves of Rs20 million and potential income and wealth tax liabilities of Rs72.477 million and Rs19.7 million, respectively.

The bourse is already under financial strains due to the May 2000 crisis when it had to utilize Rs194 million from its resources to ensure the settlement of clearing house operations. The amount is yet to be recovered from the defaulting members.