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  5. PAKISTAN AND OTHER STOCK MARKETS IN 2001.                                    

An interview with Omer Iqbal Pasha, Chairman Islamabad Stock Exchange


Jan 14 - 20, 2002

The newly elected Chairman of the Islamabad Stock Exchange, Mr. Omer Iqbal Pasha, was highly appreciative of the reforms carried out by the Securities and Exchange Commission of Pakistan(SEC), which had helped a lot in stabilizing the Capital Market in Pakistan and building the confidence of the investors. He was full of praise of the Chairman SEC for his contribution towards the overall development of Capital Market.

Mr. Pasha, who has been associated with ISE for the last many years as Director and Vice Chairman, appeared pro-transparency, contrary to the traditional secretive behavior of the brokers community, when during his interviews for PAGE, he strongly supported the SEC reforms that had opened the bourses governance to the vigil from outside in the form of non-broker directors and appointment of outside professionals as an independent Managing Director. He claimed that the new Board of Directors of ISE would shortly appoint a professional as Managing Director, with the prior approval of SEC.

Recounting the reforms measures Mr. Pasha said, at the behest of Asian Development Bank, SECP initiated a series of reforms with the view to strengthen its role as a regulator of the capital market as well as to put the country's securities market on sound footing. These reforms included, among other things, the following:

1. Restructuring of the Governing Board and appointment of professional Managing Director by the stock exchanges
2. Enhancement in Net Capital Balance
3. Introduction of Capital Adequacy
4. Ban on Blank Short selling
5. Introduction of T+3 trading and settlement system
6. Prohibition of Free Exposure Limit.

The over all objectives of the above reforms have been to bring in good governance, corporate culture, transparency in the affairs/operations of the stock exchanges; to curb the speculative trading which up till recently was rampant in the market, to strengthen the risk management regime of the stock exchanges in order to safeguard the interest of the investors and the Institution; and over and above to bring the existing trading system at par with the developed countries by replacing the balance order settlement system with T+3 trading and settlement system. Most of these reforms have already been implemented.

We have always supported the reforms because we believe that these are the means for achieving development, expansion and modernization of capital market in Pakistan.

We at ISE are committed to improve the operational efficiency of the Exchange. We strongly believe that these reforms will go along way in transforming our stock exchanges into vibrant institutions capable of meeting the challenges of the new millennium. This coupled with constant with vigilance and monitoring, the work of stock exchanges had become much safe and transparent. The confidence of the investors has been restored which is reflected in the recent upsurge in the capital markets throughout the country. The new ISE chief lauded the role of Mr. Khalid A. Mirza, the Chairman of SEC, in introduction of reforms to make the stock exchanges transparent organizations providing level field to all besides being an effective front line regulator. According to him it was Chairman SEC's personal zeal and thrust that had transformed the Regulatory Authority into a truly proactive watch dog of the corporate sector as well as securities market.

Islamabad Stock Exchange, in a short span of nine years, has successfully developed into a dynamic and vibrant financial market in the northern region of Pakistan, which was till recently known only for political, bureaucratic and real estate activity. Credit for remarkable performance which was noted and acknowledged by other Exchanges as well as experts in the field, goes to the highly dedicated, efficient and innovative teams of Chairmen and Boards of Directors who ran the affairs of ISE. It is because of their untiring efforts that ISE has carved out for itself the most prestigious position in the country, despite being a new entrant in the stock market. The newly elected Chairman, and eminent member of previous Board of Directors and a former Vice President of ISE has assumed his responsibilities with the same zeal and dedication.

Pasha, perhaps the youngest Chairman of the ISE, vowed to go beyond the ADB- SEC reforms by introducing non-broker members of the vital sub committees of the Exchange such as Arbitration and Default Management Committees. There are over a dozen such sub-committees to over-look various aspects of the management of the Exchange.

Another formidable task ahead of the new and young leadership of the ISE is the building of the Exchange on the Jinnah Avenue where it owns a towersite. He said they were looking for a builder who could construct a building on the prime site in the federal capital on Build Operate and Transfer basis. After September 11 terror attacks on the World Trade Centre Towers, the ISE had lost its earlier contractor who planned to construct a twin towers, one fot ISE and the second to own on BOT basis.

Pasha was optimistic of revival of activity in the primary Capital Market where there has been a lull for the last couple of years. He welcomed the Government decision to launch fresh issues of the entities lined up for privatization following the National Bank of Pakistan and he hoped that the private sector would also come up with fresh public offering after the reforms have enhanced/strength and institutional capacity of secondary markets.