A tough period awaits SECP Chairman

For Muhammad Ali Ghulam Muhammad, who took office as SECPs new chairman this week, a tough era lies ahead. Piles of work remains unfinished and heaps of new avenues and ventures must be undertaken - all in a dicey economic environment.
BR Research spoke to a couple of market experts (some chose to speak on the record; others were more candid) and barely could anyone pin point what should be on top of the things to do list of MAGM. The consensus view, however, is that a lot needs to be done.
From the stock markets perspective, the need to increase leverage without letting it become a monster, stepping up on the demutualisation of the exchange, the development of a corporate bond market, and the need to ensure more listing at the bourse are few of the items that should form the top agenda.
"There needs to be a listing-enabling environment; the size of the cake should expand," said Tariq Iqbal Khan, the former top boss of the National Investment Trust, pointing out that the number of de-listings have outpaced listings in the last few years. A more immediate job on hand, however, is resolving the heated row between the member and non-member directors at the Karachi Stock Exchange - an issue that has been boiling for quite some time now.
Since MAGM has had a long relationship with the market in his career, sources say they expect the SECP to tilt in favour of the KSE members - especially considering that, reportedly, the likely commissioners of the regulator have close associations with various leading business groups of the country.
But Arif Habib, a senior KSE broker, is quick to dispel these fears.
"First of all, there can be no conflict of interest, because these people sell their stakes before joining the regulator," says Habib. "Plus conflict of interest can be avoided if there is strict monitoring - besides if they don abstain from the lure of wealth, the market will eventually unveil their dirty secrets, if any," he added.
As regards the mutual funds industry, Habib argues that the SECP needs to ensure that retail investors are routed to the market through mutual funds so as to avoid getting burned by ill-formed decisions.
On the same note, Habib calls for regulatory decisions to ensure that mutual funds are big enough to explore the untapped potential. "The fund industry should have adequate minimum capital requirements", says Habib.
Another plan that has been catching dust since long is the Real Estate Investment Trust, and that needs to be stepped on pronto.
REITs are especially useful in developing economies, as it gives an opportunity to low income people and small savers to hedge against real estate inflation. "If you cannot afford to own a plot/house, at least you own a fraction of it," notes Zaigham Rizvi in an old HBFC paper.
On a broader spectrum, however, the SECP must launch on a campaign to document the businesses, whether or not they wish to get listed at the bourses. "He should work on bringing the unorganised sector into the organised sector," asserts Iqbal.
And this is where MAGMs wide range of experience can perhaps help. His experiences in corporate farming, technology firms, as well as real estate business at home and aboard can hopefully help in this regard.