PSX to revamp penalty regime for TREC holders

PSX to revamp penalty regime for TREC holders


KARACHI: The Board of Directors of Pakistan Stock Exchange Limited (PSX) has approved the various amendments to the PSX Regulations relating to revamping of penalty/enforcement regime for trading right entitlement certificate (TREC) holders / brokers, a document said.

The Board has proposed to amend the chapter 3 (PSX), Chapter 4 (TRE) Certificate and Chapter 20 (Disciplinary Actions Against TRE Certificate Holders Regulations) relating to revamping of entire penalty regime for brokers and amendments to chapter 6 Government Debt Securities (GDS) Market Regulations relating to implementation of eligibility criteria for appointment of financial institutions and asset management companies as market makers in GDS Market Pursuant to Section 7(3) of the Securities Act, 2015.

In this regard, PSX solicited public comments on the proposed amendments. 'In line with practice followed in other jurisdiction, the scope of disciplinary powers has been widened and centralized in one clause' said Shafqat Ali, Chief Regulatory Officer at PSX. According to the new insertions in the rule books, the board shall call upon a Chief Executive Officer and/or the Senior Management Officer of the TRE Certificate holder, by written notice, to resign within five (5) trading days of the date of such notice; failing which, the Board may exercise any of the powers including forfeiture of TRE Certificate, require the TRE certificate holder to surrender its TRE Certificate, impose a fine up to a maximum of Rs5 million, restrict, suspend or cancel the market making activities of the TRE certificate holder in a particular market / product available for trading at the PSX or its status as authorized participant in case of Exchange Traded Funds (ETF) on such terms and for such period as the Board may deem fit, suspend and withdraw or revoke the right of the TRE certificate holder's access to the trading system(s) on such terms and for such period as the Board may deem fit. 'The board may restrict or suspend TRE certificate holder's trading activities in a particular market / product available for trading at the Exchange on such terms and for such period as the Board may deem fit; suspend a TRE certificate on such terms and for such period as the Board may deem fit, cancel / forfeit / revoke TRE certificate"

Another new clause suggests that where a TRE certificate holder is found guilty of non-compliance with any provision of PSX Regulations, and no specific penalty for such non-compliance has been prescribed in the PSX Regulations, the amount of fine may be imposed up to a maximum of Rs l million by CR0, up to a maximum of Rs 5 million by RAC.

A TRE Certificate Holder who shall for any reason have ceased to be a TRE certificate holder of the Exchange shall nevertheless remain liable for and shall pay to the Exchange all monies, which at the time of his it ceasing to be a TRE Certificate Holder shall have been due by him to the Exchange, the document added. "The Exchange, its officers, directors, employees, Agents or representatives or any other person or entity associated with the Exchange shall have no liability whatsoever for any losses, damages, claims, legal costs or other expenses that a TRE Certificate holder may suffer or incur, whether directly or indirectly (including any loss of profit or any damage or reputation) by reason of any disciplinary proceedings instituted or disciplinary measures taken pursuant to PSX Regulations".