Spring-cleaning has begun at the Pakistan Stock Exchange (PSX). According to an English Daily, a few months after a host of employees in the IT department were axed in the wake of daily data leaks from the PSX, some of the key management staff – including Chief Regulatory Officer and Head of Product Development – has now been shown the doors.
Back in November, the Securities and Exchange Commission of Pakistan (SECP) had ordered an investigation into the leakage of trading information of Pakistan Stock Exchange (PSX)
The rumor mill reports that a few other old guards may be asked to leave, including some from the compliance department.
This is happening because they failed to ensure good governance at the bourse, although some reports blame them for being directly involved in misconduct.
The practice of leaking trading data is not new to the stock market. Several years ago, two whistle-blowers accused senior staff of illegally accessing sensitive real-time trading data and accessing emails.
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The misconducts at the bourse have been the proverbial open secret for quite some time. By 8 p.m. every day, an MS Excel sheet was leaked to those who paid for it. That sheet had all the orders over and above a certain threshold together with the Unique Identification Numbers (UIN) that transacted through those orders. A master file, that converted those UINs to investor names, was already available to higher bidders.
The English Daily reported that some investors were also blackmailed into giving money by some of the staff at the PSX, failing to do meant their data would be leaked in the market.
And that’s not all. Some of the PSX staff have also been allegedly involved in putting companies at defaulter counters (or threatening thereof) bypassing standard modes of operation.
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The recent case of Dewan Cement that witnessed noticeably high volume even by corporate investors even though the market was filled up with the noise that the stock was going to be put on defaulters’ segment.
For years, the brokers have been appointing early and mid-career staff at the exchange (at one point in time key positions too), who in turn gave out sensitive information to their patrons or played other tricks for mutual financial gains. This is nothing new.
This may not be the reason behind the ongoing tussle over directors’ elections; though it does set an important context to PSX reforms that cannot be ignored.
The new Chinese owners are not the kind of people who would budge. They have strict compliance regime and want better things to happen at the exchange.
Via: BRecorder
