KARACHI, Aug 19: A defiant statement issued by Karachi Stock Exchange at the end of a heated meeting of board of directors on Monday, signified that the stock brokers were unwilling to cede their 50-year-old control over the Exchange — without a fight.

“The board observed unanimously that the matter about the restructuring of the board of directors at the KSE was resolved amicably with the Securities and Exchange Commission of Pakistan (SECP) last year and has been functioning satisfactorily and professionally as acknowledged by the SECP time and again,” the KSE press release stated, adding: “The board is, therefore, dismayed at the fact that the aforesaid directive has been issued without any justification and prior consultation.”

The KSE went on to state: “In the light of the above, the board has constituted a committee to discuss the rationale of the aforesaid directive with the Commission.” The bourse was said to be approaching SECP chairman Khalid A. Mirza for confirmation of the time and place for holding discussions “at the earliest”.

The SECP had ordered on Tuesday that beginning next year, the total number of directors on each of the three boards of stock exchanges in Pakistan would be slashed to a half from 18 to 9; that instead of ten, stock brokers would be entitled to nominate four members on the board and the strength of non-member directors would be reduced from seven to four. And to top it all, instead of the general body electing the chairman of the board from the broker community, the chairman would be selected by the members of the board from amongst the non-member directors. The post of vice-chairman — also held by a stock broker — is to be abolished. An independent managing director is already a non- member, appointed by the board with the approval of the SECP.

Several members of the board present in the meeting, would only talk on condition of anonymity. They stated that the committee mandated to hold talks with the SECP was formed of four board members: Salim Chamdia (chairman of the board); Siddiq Dalal (vice-chairman); Munir Ladha — all three stock brokers and a non-member: Javed Akhter.

From the tone and text of the KSE press statement issued on Monday, it looked as though the Exchange was gathering momentum for a new confrontation with the corporate regulator. However, independent enquiries revealed that unlike the previous occasion when they were all up in arms, this time the broker fraternity was divided right through the centre. The hawks, who could not reconcile themselves to the end of era of brokers dominance over the Exchange had sufficient members rallying behind them, including a couple of past presidents of the Exchange. But so also were the doves, who among some prominent members, surprisingly included, the broker reputed to be the most powerful in the clan: “We’ve gone through this before. It’s no use and it’s better to give the path to the Regulator than fighting for it,” was their reasoning.

The committee formed on Monday, would seek views of the 200- strong member brokers fraternity — a more informal approach than calling a general body meeting. “Since the deadline for implementation is September 15, the committee would be expected to gather members’ consensus view on the matter and negotiate with the Regulator,” a board member said. He said that the idea generally was not of complete disregard, but some sort of give and take: “It is possible that the brokers may ask for chairman to be a member and agree to more non-member directors; or to insist that if chairman has to be a non-member, brokers should be in majority on the board and things like that,” he said. The question then is: Will the hard-boiled Mirza agree to negotiate on his directive? A source close to the Regulator said that the mood in Islamabad was generally conciliatory.