Badla is back!

Posted on 07.15.05 by StockPK Team @ 1:00 pm    

A regulator is an umpire or judge and should behave like one. He is required to be neutral and come to a reasoned decision after examining the facts. And once he comes to that decision, he should stand firm. If he backs down, the system will fail to deliver.

But firmness doesn’t appear to be the strong point of the Securities and Exchange Commission of Pakistan. The Regulator had announced that margin financing is now on and that badla (brokers’ financing) would die a time-bound death. Stock-market investors were coming to terms with the situation and learning to play within their limits. While margin financing was becoming
acceptable to investors dealing in stocks, the Regulator changed his mind.

Badla is back and has been allowed to live until a date of the Regulator’s choosing; margin financing is out. What a somersault, and from a Regulator at that!

What went wrong? Or, rather, how heavy was the pressure from vested interests?
Were the members of the Karachi Stock Exchange so powerful that they managed to force the regulator to work in their interest? The SECP has not only proved to be a weak regulator but also exposed itself to the criticism that it acts first
and thinks later.

Nothing can be worse for the credibility of a Regulator than for it to be unsure and confused. This time it is a failure of major dimensions. Shouldn’t some people be required to take the responsibility for creating this situation, and make an exit from the SECP?

Source:Jang