950809

ISE to start

computerized

trading by

December

RECORDER REPORT

ISLAMABAD: The Islamabad Stock Exchange (ISE) will introduce computerized trading before December this year. This was stated by Tariq Iqbal, President of Islamabad Stock Exchange, here on Wednesday.

Addressing the concluding ceremony of the five-day workshop on 'Investing in Shares' organised by the Professional Management Securities and Saudi-Pak,

Tariq Iqbal said that the ISE will be in a position to safeguard the interests of the stock trade and investing public through self-regulating of its working.

Outlining the steps, he said that the Islamabad Stock Exchange will be fully automated in the near future.

At the concluding session, Javed Panni, Member, Securities, Corporate Law Authority, addressed the participants on the regulatory role of the authority and the developments in the capital market.

Tariq Iqbal said that computerized trading, expected to be introduced before December 1995, will result in a transparent clearing and settlement system. The time of transaction will also be automatically logged on, thus satisfying any apprehensions that the investor may have.

He stated that to-date not a single ISE member has defaulted and he expressed the hope that the ISE would continue to maintain this outstanding record.

Tariq Iqbal complimented the organisers for arranging an intensive stock market related training programme.

Earlier, Javed Panni said that under CLA regulations there must be a gap of at least one year between the sponsor's equity and the public issue and the machinery should have arrived at a profit before the public issue is made.

He said that companies no longer have to obtain CLA's permission before making a rights issue.

Instead, they will now have to conform to the rules isued by the CLA. One of the rules is that no right issue can be issued within one year of the last equity issue. The rate of premium will depend on the free reserves of the company and auditors will have an important role to play in this decision.

Furthermore, he said, after announcement of the right issue, it will be mandatory that the book closure takes place within 45 days.

On the regulation of stock exchanges, Panni said that the T+3 system of settlement and clearing will be made applicable for the first time on three companies, namely TriPak, TeleCard and Pakistan General Insurance. This is expected to reduce the possibility of cornering of such small capital issues as happened in the case of American Life Insurance.

On CLA's role in capital market development, Panni mentioned corporatization of brokerage houses, setting up of the second credit rating agency, and setting up of a central depository as some of the steps that have been initiated by the CLA.

He also mentioned the regulation of open and mutual funds which will be managed by asset management companies. The brochures of such companies will have to be approved by the CLA in advance to avoid any mis-statement of facts. For each such open-end fund scheme, trustees will have to be appointed by the companies.

He said that the country's three stock exchanges are gradually improving their operations, thus lessening the need of regulation by CLA.

Farooq Zafar, Vice-President of Islamabad Stock Exchange, speaking about the progress and prospects of the Islamabad Stock Exchange, said that the rate of business development at ISE has surpassed the expectations of most members. He expressed the hope that with automated trading and after the construction of ISE's own building, the stock trade in the region will receive further impetus.

Farrukh Mahmood, Director, Professional Securities Management, spoke about the role of foreign institutional investment in the development of emerging capital markets such as Pakistan.

He said that all the Asian emerging markets have been following a similar pattern of behaviour, depending largely on international factors such as dollar/yen parity and US interest rates. This internationalization of Pakistani stock market is likely to result in the Pakistani capital market to once again figure on the buying list of foreign fund managers.