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The KSE is a tiny market, the total market cap (that is the total value of all the shares present on the exchange) is only about $42 billion, less than a tenth of the Bombay Stock Exchange ($1.2 trillion) and $16 trillion for the NYSE.
Only about a quarter of the shares listed are available for trading, out of which 30% is held by foreign funds. Since there are such few shares freely floating, small trades can make an outsized difference. Now like most things in Pakistan, the stock market is extremely unregulated. So insider trading and market manipulation is routine. All the Securities and Exchange Commission of Pakistan can do is levy tiny fines.
The head of the AKD Group, the country’s biggest brokerage, is of course Aqeel Dhedhi who has recently been accused of insider trading. Trouble is, someone with the clout of Dhedhi can pretty much do whatever he wants. Check out this gem reported at Reuters:
An SECP investigator accused traders, including Dhedhi’s brokerage, of buying shares in a state-run Sui Southern Gas Co before an official announcement allowing the company to raise its prices. In the weeks before Sui Southern’s announcement, the stock price jumped from 13.5 rupees to 20 rupees, its biggest hike in five years. The National Accountability Bureau, the state-run anti-corruption agency, called it a case of insider trading. But the SECP said its own confidential investigation showed no evidence of fraud. The SECP whistleblower in the case has been suspended from her job for disclosing “confidential information”.
Oh and half of the SECP’s and KSE’s top management used to work for Dhedhi. And they aren’t in a rush to punish illegal profiting.
Imtiaz Haider, the SECP commissioner in charge of market regulation, acknowledged fines were largely symbolic. If they were too high, he said, brokers might not be willing to pay them. Contesting fines in the congested court system could take years.
“The purpose is more to name and shame,” Haider said in an interview. “It causes them reputational damage.”
And this. Naqvi, the KSE head, acknowledged his priority has been to boost the market, not to crack down on it.
“My management style isn’t confrontational because I want to build confidence in the market,” he said.
Only about a quarter of the shares listed are available for trading, out of which 30% is held by foreign funds. Since there are such few shares freely floating, small trades can make an outsized difference. Now like most things in Pakistan, the stock market is extremely unregulated. So insider trading and market manipulation is routine. All the Securities and Exchange Commission of Pakistan can do is levy tiny fines.
The head of the AKD Group, the country’s biggest brokerage, is of course Aqeel Dhedhi who has recently been accused of insider trading. Trouble is, someone with the clout of Dhedhi can pretty much do whatever he wants. Check out this gem reported at Reuters:
An SECP investigator accused traders, including Dhedhi’s brokerage, of buying shares in a state-run Sui Southern Gas Co before an official announcement allowing the company to raise its prices. In the weeks before Sui Southern’s announcement, the stock price jumped from 13.5 rupees to 20 rupees, its biggest hike in five years. The National Accountability Bureau, the state-run anti-corruption agency, called it a case of insider trading. But the SECP said its own confidential investigation showed no evidence of fraud. The SECP whistleblower in the case has been suspended from her job for disclosing “confidential information”.
Oh and half of the SECP’s and KSE’s top management used to work for Dhedhi. And they aren’t in a rush to punish illegal profiting.
Imtiaz Haider, the SECP commissioner in charge of market regulation, acknowledged fines were largely symbolic. If they were too high, he said, brokers might not be willing to pay them. Contesting fines in the congested court system could take years.
“The purpose is more to name and shame,” Haider said in an interview. “It causes them reputational damage.”
And this. Naqvi, the KSE head, acknowledged his priority has been to boost the market, not to crack down on it.
“My management style isn’t confrontational because I want to build confidence in the market,” he said.
