Islamabad, November 10, 2016 (PPI-OT): In order to protect investors from market abuse in the wake of a surge in stock market activity, the surveillance team of Securities and Exchange Commission of Pakistan (SECP) is actively monitoring trading activity at the Pakistan Stock Exchange (PSX). Mr. Zafar Hijazi, the SECP chairman, has directed the surveillance and enforcement teams to take strict action against all those involved in market manipulation and to expedite the implementation of the following measures.
First, listed companies experiencing unusual trading activity are being directed to issue clarifications regarding movements in the price or volume of their shares under Section 97 of Securities Act, 2015. Investors are advised to exercise great caution before investing in the shares of a company that has no explanation for a surge in its stock price or traded volume. Second, the SECP has approached the FIA to take action against those who are spreading rumour through social media.
The SECP has shared complete information of some individuals who have been engaged in such malicious activities on social media, most notably on Facebook. The FIA has been requested to take all necessary actions, including blocking of these Facebook accounts and to take cognizance of such activities under cybercrime laws.
Third, ongoing inspections of a number of brokerage houses by the SECP staff to check segregation of client cash and shares are to be completed within a week. Investors are cautioned that in their own best interest, they should regularly monitor the safe custody of their shares in the sub – accounts maintained by their stock brokers. Further, inspections against alleged provision of illegal in – house badla financing are being fast tracked.
Chairman Hijazi emphasized that individual investors should preferably invest through mutual funds, which provide a safe and profitable avenue for investing in the stock market. Investors should avoid leveraged speculation in stocks based on rumours as it will likely result in large losses.
The SECP chairman has directed the SECP officers to consider revising the criteria that determines which shares can be pledged by the stock brokers to the clearinghouse as margin against exposure. The revised criteria shall ensure that shares of economically weak companies that are facing a speculative surge in trading activity will not be eligible as margin. In case of a market reversal, shares of economically weak companies are far more likely to face dramatic drops resulting in large losses and panic among investors.
For more information, contact:
Head, Internal and External Communication
Securities and Exchange Commission of Pakistan (SECP)
NIC Building, 63 Jinnah Avenue, Islamabad
Tel: +92-51-9214005 or +92-51-9214009 (Ext. 378)