After technical issues, stock brokers association slams PSX for 'new trading system'

The Pakistan Stock Brokers Association (PSBA) slammed the Pakistan Stock Exchange (PSX) for its "hasty decisions" after the bourse’s recently-introduced trading system went through issues for the second consecutive day.

The PSBA, calling for the restoration of the old system, also said that the financial loss, if any, will not be "the responsibility of the securities brokers/market participants".

In a letter, dated October 26, to Securities Exchange Commission of Pakistan (SECP) Chairman Aamir Khan, the PSBA said that its "members are facing difficulties in consummating transactions in the recently introduced New Trading System (NTS) by the PSX on October 25, 2021".

New PSX trading system to go live from Monday

The PSX on Monday fully operationalised its new trading platform, DTS, after which technical issues were reported. Additionally, the issues also meant the system and market report was delayed for many hours.

Volumes have also significantly reduced with a mere 162.8 million shares changing hands on Tuesday. On Monday, a mere 165.9 million shares were traded.

The NTS replaces the Karachi Automated Trading System (KATS), which was in operation since 1997.

PSX witnesses dull trading: BRIndex100 lacks luster

The key changes to the DTS are an extension of 30 minutes for the continuous trading session, reduction of the post-close session to 10 minutes, and reduction of break period to 1 minute. However, the system has faced technical issues since the commencement of its operation.

“As you are aware that investors all over the world use various trading platforms, including but not limited to, KATS, KITS, Online, and Internet Based Trading, which connects them directly with the Trading Engine, provided by the Exchange. This essentially means that any financial loss, incurred by the investors at large due to usage of NTS will not be the responsibility of the Securities Brokers/Market Participants,” stated the letter by Bilal Farooq Zardi, secretary general of the PSBA.

“You are also aware that under Regulation 5 of the Securities Exchanges (Licensing and Operations) Regulations, 2016, it is a licensing condition for any Securities Exchange to deploy adequate infrastructure including modern technologies to enable it to provide trading platforms in accordance with international standards.

“Thus, the primary responsibility is of the Securities Exchange, itself,” said PSBA.

The association said that its members voluntarily provided all the required assistance to help the Exchange authorities to make the NTS system efficient, effective, and smooth to implement. “In this process, 18 mock sessions were conducted and errors, flaws & imperfections could not be addressed/removed in their entirety. This has compelled us to state that the Exchange is being damaged by unprofessional decision making,” it said.

The PSBA added that the NTS went live without fixing errors thereby investors' around the globe had to suffer and public money has been put at stake.

“Volumes have shrunk drastically due to hasty decisions based on the impractical system caused revenue loss not only to the Exchange, our members but also to the public at large. We fail to understand the logic behind its abrupt implementation during the rollover week.”

“Furthermore, it is pertinent to mention that this NTS is missing important decision-making features which were available in the previous system namely Karachi Automated Trading System (KATS),” said PSBA.

It added that in order to avoid further credibility and financial loss, the old system (KATS) be immediately restored without any further delay.

“Any delay in acting on the above could result in serious losses to investors and may open PSX to face extreme reactions,” said PSBA, while urging the board to take action.

On Tuesday, the PSX released its day-end numbers after 9pm, which showed the KSE-100 Index decreased by another 190 points, ending at 45,227.80.