SECP orders study of events of 2008 stock market crash
The Securities and Exchange Commission of Pakistan (SECP) has ordered an independent study to analyze the role of Stock Exchanges as well as the SECP in the 2008 stock market crises.
An independent consultant Shamim Ahmed has been hired in view of maintaining transparency in the study report that will analyze the role the regulator and management of stock exchanges and other shareholders.
The study of market crises entailing long term negative impact for the market needs to be carried out for helping SECP in its policy formulation regarding ensuring adequate levels of transparency and general developments of the capital markets of Pakistan.
Addressing a press conference here on Friday, the SECP Spokesman Imran Ghaznavi announced that the apex regulator of stock markets has hired the services of Shamim Ahmed Khan for analyzing the issue in greater detail.
He said Shamim Ahmed will prepare a report on the background, impact and recommendations to avoid future recurrence of the 2008 stock market crises in Pakistan. He will identify the factors leading to issues observed in the Pakistani securities market in 2008 and analyze the correlation of market movement with trends in the global market.
The study will also evaluate the rational for placing a floor on the share prices of listed securities w.e.f. August 27, 2008 (the Floor) in terms of Force Majeure Regulations of the Regulations Governing Risk Management for Karachi Stock Exchange (KSE), Lahore Stock Exchange (LSE) and Islamabad Stock Exchange (ISE) respectively, the spokesman said.
He went on to say that it will also analyze the role of SECP in the decision to impose the floor and the subsequently remove the Floor on December 15, 2008.
The spokesman said Shamim will also present the review of the imposition of the Floor on the share prices in the market and on the market participants and shareholders and determine the extent to which any market participant benefited or was disadvantaged by the imposition of Floor as the case may be.
He will examine the events which took place during the imposition of the Floor, and the subsequent measures taken to bring regulatory and operational reforms for enhancing transparency and investor protection. He will also examine whether the Central Depository Company (CDC) played the role of a frontline regulatory of the depository system.
Shamim Ahmed Khan has served as Chairman SECP during April 1997 to March 2000. The study will help SECP in assessing how our markets are currently poised in comparison to the year 2008 and in identifying areas which require our special focus of regulator.