Following the approval of the Securities and Exchange Commission of Pakistan (SECP), Islamabad Stock Exchange (ISE) has decided to launch indigenously developed Electronic Trading System (ETS) for buying and selling of shares, offering new investment products with Direct Market Access (DMA) to foreign institutional investors/ clients.
On the conclusion of the first Board of Directors meeting of the demutualised ISE, Mian Ayyaz Afzal Managing Director and Chief Executive told Business Recorder here on Wednesday that the ETS was a new trading engine that would allow younger exchanges to operate independently.
The ISE'ss locally-developed trading software, ETS, is to be made functional by mid-October. The testing of the new software has been done successfully before launching to attract foreign investors directly by ISE. The project was initiated by former MD ISE and existing Commissioner SECP Imtiaz Haider and the present management has completed the task.
The MD of ISE also said that once ISE implements self-owned Electronic Trading System, "a whole new world of business opportunities can be explored. ISE can become a new potential investment avenue." For example, the implementation of the ETS would enable the exchange to provide Direct Market Access to foreign institutional clients; market-making opportunities for liquidity providers; hedging facilities for Ready - Future markets and the new system would provide online, Mobile and SMS Trading facilities for the clients of ISE members.
The ETS would also provide arbitrage opportunities between ISE, KSE and LSE, besides introducing Contract for Differences (CFDs), Mian Ayyaz Afzal added. When asked about the first Board of Directors meeting of the demutualized exchange, he stated that the ISE was the first local exchange which has taken the initiative and convened the Board of Directors meeting. Globally, he said, it was the 9th exchange which has started functioning under the concept of de-mutualisation. The enactment of the Stock Exchanges (Corporatisation, Demutualisation and Integration) Act, 2012 has brought the Pakistani capital market on a par with other international jurisdictions like India, Malaysia, Singapore, the US, UK, Germany, Australia, Hong Kong and Turkey among others.
Meanwhile, after demutualization, ISE's new Board of Directors met here on Wednesday to consider various matters, including election of chairman of the Board, consideration of post Demutualisation changes in the regulatory regime of the Exchange and constitution of different committees of the Board to deal with different matters.
The new Board includes Zahid Latif Khan, Mian Humayun Parvez, Mohammad Masud Chaudhry and Asif Saeed Malik as elected directors whereas Muhammad Rashid Zahir, R.A. Chughtai, Umar Hayat Khan, Hussain Ahmed Ozgen, Malik Qamar Afzal and Chaudhry Mujeebullah are nominee directors appointed by the SECP. Mian Ayyaz Afzal, Managing Director, CEO is the 11th director on the Board by virtue of his office.
The Board unanimously elected Muhammad Rashid Zahir as its Chairman for the third time. Rashid Zahir has also been a director on the Board of ISE during 2001-2004, 2006, 2010 and 2011. Consequent upon re-registration of the Islamabad Stock Exchange, it is now a public company limited by shares with effect from August 27 this year. Now the main task before the Exchange is to find a strategic investor for the sale of its 40% shares whereas 20% shares are to be issued to the general public.
The plan of demutualization of the stock exchanges was initiated by the Securities & Exchange Commission of Pakistan (SECP), back in 2004 under the capital market reforms with the support of Asian Development Bank to bring the stock markets in Pakistan at par with international stock exchanges. The untiring efforts of the SECP and continuous support from the three bourses finally resulted in promulgation of Stock Exchanges (corporatisation, Demutualization and Integration) Act 2012 in May 2012 that enabled exchanges to demutualise in accordance with terms of that Act.
Through Demutualisation, governance at the stock exchanges shall be further enhanced and will lead to independent, efficient, and transparent decision making in the interest of stakeholders, particularly the investors. The stock markets shall fetch foreign investment through strategic investors whereas general public shall also be the shareholder of the Exchanges that will help broaden the market base. With the improved perception and availability to wide range of products and services; a demutualised ISE will attract more listings. Through Demutualisation, transparency in the operations of the ISE shall increase and enhance confidence of domestic and international investors, ISE added.
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