A Securities and Exchange Commission of Pakistan SECP official confirmed to The Express Tribune on Thursday that the draft of regulations pertaining to provision of leverage at equity markets had been forwarded by the apex regulator to the law ministry.
The official explained that SECP will gauge the likely impact of these changes. The introduction of leverage to the markets is expected to provide much-needed liquidity to the local bourses that have been without any mechanism for share financing for more than 21 months. On April 8, the SECP had stopped investors from assuming fresh positions in continuous financing system MK-II after the local stock exchanges witnessed crumbling equities prices.
After much lobbying from local brokers and influential market participants, a committee was set up on June 22, to submit recommendations for a new leverage mechanism for the bourses. However, the draft hit a hurdle as the then chairman Karachi Stock Exchange KSE Zubyr Soomro raised multiple objections against the proposed mechanism, citing lack of transparency and risk mitigation tools in the proposed system.
Repeated attempts to reach a compromise between brokers and the SECP-nominated chairman remained fruitless and the draft was consequently delayed. Given the repeated delays in the introduction of the Securities Act of , the quick introduction of margin financing at the local bourses will be considered an early score for newly inducted SECP Chairman Mohammad Ali Ghulam Mohammad.
The implementation of the regulations is being considered as goods as an injection of funds by many stock experts. Stock prices have rallied since November , after spending months in the doldrums. Except for investments in blue chip energy stocks, local investors have remained largely inactive during the recent surge. Market pundits are hopeful that the positive sentiment that has so far been limited to index heavyweights will spill over to the broader market with the introduction of leverage financing.
These unscruplous brokers will again loot the innocent investors by creating artificial volumes. Lets wait another crisis. Grape wine is that the new SECP Chair is actually planted by a major stock broker, if this is true, that broker will drive the market!
God bless Pakistan and help those who have been suffering from poor market performace! It is good news for also little investor who have an opertunity to overcome from his investment. Comic Wisdom - by Sabir Nazar December Comic Wisdom - by Sabir Nazar November Comic Wisdom - by Sabir Nazar October Comic Wisdom - by Sabir Nazar September This material may not be published, broadcast, rewritten, redistributed or derived from.
Tuesday, 05 Dec Subscribe. Tuesday, 05 Dec Today's Paper Advertise. Margin trading system one step away. The perplexities of regulators The role of regulators operating in the country has always been perplexing.
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