After Technical Issues, Stockbrokers’ Association Slams PSX for ‘New Trading System’ – Markets

The Pakistan Stock Brokers Association (PSBA) has criticized the Pakistan Stock Exchange (PSX) for its “hasty decisions” after the exchange’s recently introduced trading system ran into problems for the second day in a row.

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

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

The new PSX trading system will go live from Monday

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

Volumes also fell significantly with just 162.8 million shares traded on Tuesday. On Monday, just 165.9 million shares were traded.

The NTS replaces the Karachi Automated Trading System (KATS), which had been operating since 1997.

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

“As you know, investors around the world are using various trading platforms, including but not limited to KATS, KITS, Online and Internet Based Trading, which connects them directly to the trading engine provided by the Exchange. This essentially means that any financial loss suffered by investors in general due to the use of the NTS will not be the responsibility of the securities dealers / market participants,” said the letter from Bilal Farooq Zardi, Secretary General of the PSBA.

“You are also aware that under Regulation 5 of the Stock Exchanges (Licensing and Operations) Regulations 2016, any stock exchange is subject to a condition of license to deploy adequate infrastructure, including modern technology, to enable it to provide trading platforms that comply with international standards.

“So the primary responsibility lies with the stock exchange itself,” the PSBA said.

The association said its members have voluntarily provided all necessary assistance to help stock exchange authorities make the NTS system effective, efficient and easy to implement. “In this process, 18 mock sessions were conducted and errors, flaws and blemishes could not be fully addressed/removed. This compelled us to declare that the Stock Exchange is damaged by unprofessional decision-making,” he said.

The PSBA added that the NTS went live without correcting errors, which caused investors around the world to suffer and public money was at stake.

“Volumes have declined significantly due to hasty decisions based on the inconvenient system which have caused a loss of revenue not only for the Exchange, our members, but also for the general public. We don’t understand the logic behind its blunt implementation during the rolling week.

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

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

“Any delay in action on the above could result in serious losses for investors and could expose PSX to extreme reactions,” the PSBA said, while urging the board to act.

On Tuesday, the PSX released its end-of-day numbers after 9 p.m., which showed the KSE-100 index was down another 190 points, ending at 45,227.80.

Dolores W. Simon