Representatives of South Asian Federation of Exchanges (SAFE) meet in Karachi

Jan 29 - Feb 04, 2007

A joint index of the South Asian stock markets is likely to be launched soon as a consensus on launching a joint index has already been developed among the member countries though it took at least six years to reach the conclusion.

The joint index is expected to pave the way for much talked about cross border listings, the delegates of the moot expressed the hope after the meeting.

During the meeting the members of the South Asian Federation of Exchanges (SAFE) reached a memorandum of understanding (MoU) expressing their willingness to launch a joint South Asian Index of the stock markets in the region. It was the conclusion of a two-day meeting held at Karachi Stock Exchange last week. However, the weightage of the proposed Index would be company based rather than the country based, which has been developed with the help of Dow Jones Index.

It may be mentioned that SAFE is an organization for regional cooperation comprising 19 member entities of eight South Asian countries. SAFE is a "Not-for-Profit" organization, established in January 2000 in Bangladesh on the initiative of the Chittagong Stock Exchange, however, the Secretariat has now been permanently shifted to Islamabad, Pakistan.

Rajni Kant Patel, who is the current Chairman SAFE, while outlining the outcome of the two-day meeting observed that so far no timeframe had been evolved to launch the said index. However, SAFE member countries were working on this project for the last six years. Most of the work had been carried out and a formal launch of the Index was expected soon.

Actually, the meeting was held following realization of available opportunities in the region. The potential to attract foreign investment in the South Asian region is more attractive as compared to other parts of the world because the markets in the developed world have already reached a saturation point.

Prime objective of SAFE is to provide a forum for regional cooperation and to facilitate the development of securities market in the South Asian region for mutual economic growth and development.

The Executive Committee (EC) of SAFE comprises seven members from various member countries. It was the first EC Meeting in 2007 held in Karachi last week, in collaboration with Karachi Stock Exchange Ltd (KSE).

Representatives who attended this SAFE EC meeting included: from India (Mr. Rajnikant Patel, Chairman SAFE and MD & CEO, BSE and Mr. Sanjay Saksena, GM International Relations, BSE), from Bangladesh (Mr. Ahmad Rashid, Vice Chairman SAFE and SVP, Dhaka Stock Exchange), from Nepal (Mr. Rewat Bahadur Karki, GM, Nepal Stock Exchange) and from Pakistan (Mr. M.A. Lodhi, MD, KSE).

The meeting was an event of great significance as it would bring forth the Memorandums of Understanding (MoUs) between SAFE and its member countries regarding the South Asian Index. It would serve as a platform to bring together securities market, securities regulators and other stakeholders of the region to examine the importance of regional cooperation in terms of the launch of South Asian Index.

SAFE has been endeavoring to initiate Cross Border Listing and Trading amongst the regional countries. The development of a South Asian Index is a key project, which shall serve to represent the investment potential of the region. A regional Index has been developed in collaboration with Dow Jones Indexes, aimed at measuring and reflecting the performance of leading stocks of the prominent market sectors, listed at the SAFE member exchanges. The Index shall not only provide an overview of the performance of SAFE equity markets as a regional grouping, but would also serve as an underlying tool for developing new investment products in the region.

The two-day meeting also included a presentation on the "Demutualization experience of BSE" by Mr. Rajikant Patel, Managing Director (MD), Bombay Stock Exchange (BSE), and it was attended by the brokerage community, Board of Directors of KSE and regulators from SECP. Bombay Stock Exchange Limited (BSE) is the oldest stock exchange in Asia, established in 1875. The demutualization experience of BSE is the latest in South Asian region and the newly found Bombay Stock Exchange incorporated under the BSE (Corporatization and Demutualization) Scheme, 2005 is attracting a lot of international interest. This session with Mr. Patel shall provide very useful insight into challenges and benefits of demutualisation.