15 new brokers got registered with SECP: NCEL membership base shows healthy growth in fiscal year 2010

The membership base of the National Commodity Exchange Limited (NCEL) has shown a healthy growth during 2009-10 with addition of 15 new brokers who got registered with the SECP, under the Commodity Exchange and Futures Contracts Rules, 2005.
According to the Annual Report 2010 of the SECP, the trading volumes at NCEL showed an exponential rise. The total traded value of contracts climbed by 518 percent to Rs 63.34 billion compared to last years Rs 10.25 billion. The number of contracts traded also increased to 314,670 in 2009-2010 from 24,571 traded in 2008-09 representing a growth of 1181 percent. In addition, the membership base of NCEL also showed a healthy growth with addition of 15 new brokers.
The SECP report said that the advent of 2010 was marked positively at the KSE consequent to the promising economic outlook for Pakistan. The KSE-100 index after witnessing a turbulent FY09 following global recession along with various other factors posted considerable gains. The KSE-100 index picked up momentum mainly owing to build-up of foreign exchange reserves, reduced rate of inflation in the first quarter of FY10 and net inflow of foreign investment.
The benchmark index manifested its strength by a robust start; the KSE-100 index geared up from year's low of 7,270.72 points and touched 9,845.74 points by October 15, 2009. The tangible evidence of economic growth in the country contributed significantly to the index growth. However, the KSE-100 index faced a sluggish trend later resulting in meager decline in index values. The stock market remained dull and range-bound due to numerous factors including instability in the exchange rates, rising circular debts among various government entities, rumours regarding the implementation of capital gains tax, unavailability of a leverage product in the stock market, etc, which arrested the positive movement of the market.
However, during the second half of the FY10, KSE-100 index outperformed and emerged among well performing exchanges, internationally. The KSE-100 index crossed benchmark of 10,000 points in March 2010. Upward trend in the index was also reflected in the improved market capitalisation, which stood at year' high on April 19, 2010. However, the positive trend of index could not be sustained by the end of the fiscal year.
Irrespective of the numerous negative factors hampering the robust index growth, the KSE-100 index stood at 9,721.61 points as of June 30, 2010, increased by 33.71 percent year on year basis reflecting the overall improved outlook of capital markets. The market capitalisation stood at Rs 2,732.373 billion ($32.30 billion). The salient factor motivating the stock market sentiments was increase in foreign investment with a net inflow of $431.9 million from July 2009 to March 2010. This is considered a large increase due to the negative foreign portfolio investment in the last financial year.
The report said that the total number of brokerage houses registered with the SECP stood at 299 on June 30, 2010, as compared to 321 at the end of the last financial year. Ninety-two percent of brokers are corporate and the rest are working as individual brokerage house. Fifty-two percent of the total registered brokers were from the KSE as compared to 30 percent from the Lahore Stock Exchange (LSE) and 18 percent from the Islamabad Stock Exchange (ISE).
In order to foster a fair and transparent market and to ensure the compliance of prevalent regulatory framework, the Monitoring and Surveillance Wing (MSW) took an assertive and dedicated approach to identify any misappropriation or potential abuses in the stock markets. The SECP focused on the detection of sophisticated schemes for market abuse, price manipulation, insider trading along with brokers' operational malpractice to safeguard investors' interests, SECP Annual Report added.