Spring-clean at the PSX

At the Pakistan Stock Exchange (PSX) spring-cleaning has begun. A few months after a host of employees in the IT department were axed as a token action 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. The PSX grapevine reports that a few other old guards may be asked to leave, including from the compliance department.

Their fault? Nobody knows for sure. Perhaps in the stars. Or perhaps in the fact that they failed to ensure good governance at the bourse, although some reports blame them for being directly involved in misconduct.

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 would have 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.

Sources say some investors were also blackmailed into giving money by some of the staff at the PSX, failing which 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. The recent case of Dewan Cement that witnessed noticeably high volume even by corporate investors (as against individual punters) even though the market was ripe with noise that the stock was going to be put on defaulters’ segment.

All this spring cleaning business is what irking the brokers – the lot that usually held sway at the bourse. 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 may not be the reason behind the ongoing row over directors’ elections; though it does set an important context to PSX reforms that cannot be ignored. But the die has been cast and the new Chinese owners are not the kind of people who would budge. Best for brokers to keep calm, carry on and learn how to survive in fair game play!