'Tight monetary policy has affected liquidity': Chairman SECP

[Naveed Yaseen]

KARACHI (July 12 2008): The Chairman of Securities and Exchange Commission of Pakistan (SECP), Dr Razi-ur-Rahman has said that the present negative trend in the equity market is due to State bank of Pakistan's (SBP) tight monetary policy measures, which have affected market liquidity.

Talking to newsmen at the launching of Analyst Certification Award, he said that as such there is no crisis in the equity market and no one can determine the market performance in two or three months. Karachi stock market, too, has been affected by SBP's monetary policy. Hence, it is witnessing bearish trend for the last few weeks, he said.

He said that market regulations have not been changed first the times as previously several times changes had been made for market improvement. He said that increase in the upper lock and decrease in the lower lock were also a step to give an opportunity to small investors to de-list their holdings in the market. However, short liquidity has created many more troubles, he added.

He said that SECP has taken some measures for safe exit of small investors, while at present Karachi Stock Exchange and SECP are also jointly working on the Equity Market Opportunity Fund worth Rs 50 billion, expected to be launched in the next two weeks.



The upper and lower locks do not determine the market trend, and changes in the regulations were made purely in the interest of small investors, he added. He said that at present major equity markets are under pressure and are seeing downward trend. He added: "Indian equity market has also declined by 40 percent".

Earlier, at a press conference on 'Analyst Certification Program' (ACP) he said that SECP has launched this program in collaboration with the CFA Institute and CFA Pakistan.

He said that it was a major step of SECP to move towards a regime where financial market players would be required to have necessary and relevant certification. "The present environment in Pakistan's capital markets does not foster or mandate minimum levels of the required knowledge for capital market participants or intermediaries," he said.

He said that various types of financial intermediaries operating in the capital and money market in Pakistan need to be adequately trained and certified in order to improve the overall profile and functioning of the capital markets in the country.

The SECP Chairman also announced that the Commission would also provide 150 scholarships for two components of the ACP. SECP will offer 50 scholarships for the component of CFA Level 1 and another 100 scholarships for the local module.

Dr Vibhakar, Deputy Head of Asia Pacific Operations for CFA Institute, said that CFA Institute and CFA Pakistan are "pleased to collaborate with SECP and help improve the professional excellence of investment professionals in Pakistan".

He announced that as a gesture of support for this important cause, CFA Institute is announcing 100 scholarships for CFA candidates in Pakistan, which will be awarded through CFA Pakistan.

Mohammad Shoaib, CFA representative, said that CFA Pakistan is committed to work closely with the regulators and all stakeholders in financial markets to improve the level of professional and ethical standards in the country. He also thanked SECP Chairman for providing CFA Pakistan an opportunity to work closely with SECP team for the achievement of this objective.

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