A group of investors at the Islamabad Stock Exchange (ISE) has approached the Competition Commission of Pakistan to participate in the proceedings against the Karachi Stock Exchange (KSE) on the alleged abuse of dominant market position.
Sources told Business Recorder on Tuesday that a number of small investors have jointly filed a petition against the KSE with the commission. This group of ISE investors has been engaged in buying and selling of shares for the last many years and claimed to be direct victim of KSE monopoly.
In a presentation to the commission, investors said that they are inextricably linked with the inquiry being investors of the stock exchange. The commission must ensure that the local investors should be given an opportunity to submit their reservations against the KSE before the commission.
The investors opined that whatever is the outcome of ISE complaint, the investors would be affected by the decision. Moreover, the presence of the investors would also facilitate the commission in its proceedings. Therefore, investors having a sufficient interest in the outcome of the proceedings should be permitted to participate in the proceedings.
The investors have also submitted proof of payment of fees, authority letter and a detailed presentation to the commission.
According to investors, they have observed certain practices in the securities market, which they find disconcerting and slightly confusing. This is related to the price difference for the same security listed on two exchanges. If any investor wish to trade in a security which is listed on both the KSE as well as ISE they have found that the best price is available only on the KSE. Due to this advantage, investors have to trade on the KSE to get the best price for a particular security.
Practically, the local investors would need to carryout transaction on the KSE to get the best available price for buying/selling shares in the particular securities. The investors have no control over the execution of the process, which hinges on the relations between the two trading members of different exchanges.
It is in the worst case scenario possible that the order may not be placed at all and that the broker to whom the order is placed, matches the order within his own system. This system while confusing for the investors also lacks transparency and does not adequately capture the dynamic nature of the securities market.
The rationale behind enacting of competition law is that there should be a minimum level of competition in a market and when there is not enough competition in the market, then the imbalance must be redressed. The law also requires that the big players should be regulated in such a manner that they are not at liberty to change the market dynamics according to their own will and pleasure.
KSE is clearly in such a position and is exploiting that position as demonstrated by its unjustified refusal to deal with ISE. In light of these circumstances, the commission should take appropriate steps and measures to rectify the anti competitive practices so that the investors of ISE do not face discrimination, ISE investors added.
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