De­mu­tu­al­iza­tion of the stock ex­change – a land­mark achieve­ment

Enterprise - - SPECIAL FEATURE -

Stock ex­changes have been op­er­at­ing in Pak­istan as non- profit or­ga­ni­za­tions with a mu­tu­al­ized struc­ture that made mem­bers own­ers with trad­ing rights. Since traders were mem­bers and part of the de­ci­sion- mak­ing process, this re­sulted in con­flict of in­ter­est and lack of trans­parency. In­vestors had se­ri­ous reser­va­tions as the ex­changes could be ma­neu­vered to max­i­mize the in­ter­ests of the mem­bers. Through the ef­forts of the Se­cu­rity and Ex­change Com­mis­sion of Pak­istan ( SECP) to­wards de­mu­tu­al­iza­tion of the stock ex­changes, a bill was ap­proved at a joint sit­ting of the par­lia­ment on March 27, 2012 and was en­acted law by the sig­na­ture of the pres­i­dent on May 27, 2012. The af­ter­math of the de­mu­tu­al­iza­tion has been a booster in in­vestor con­fi­dence and rapid rise in the Pak­istani stock ex­changes and in­vest­ments have poured in from lo­cal and for­eign in­vestors.

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