February 23, 2018

SECP orders probe as allegations of ‘leaked data’ surface

News Source: Express Tribune

Writer: Salman Siddique

KARACHI: As the Pakistan Stock Exchange’s (PSX) benchmark index experiences a lengthy losing run, some brokers have complained to the Securities and Exchange Commission of Pakistan (SECP) about leakages of their ‘confidential’ trading data which they say is causing serious monetary losses.

The data being allegedly leaked contains their minute-to-minute trade orders (buying and selling of shares) and is being leaked to their competitors and/or other beneficiaries, sources at the SECP said.

“The data should strictly remain confidential as per the prevailing laws,” they added.

“The leakage of data is like your opponent constantly gazing on your cards during the game which eventually results in a loss,” an official explained, adding that “the leaked data may be used like a weapon against your opponent to win a war.”

SECP officials said that the PSX and National Clearing Company of Pakistan Limited (NCCPL) are the only two institutions that record the ‘live’ data. The officials said the leakage of data is a criminal offence and is considered to be ‘insider trading.’

As per SECP laws, somebody involved in the crime can be imprisoned for a period of up to seven years and monetarily penalised.

SECP orders investigation

Meanwhile, the SECP has ordered an investigation into the leakage of trading information at the PSX. “The SECP constituted a team with a mandate to immediately start the investigation proceeding to identify and curb the sources of such unlawful practices and take necessary corrective and punitive actions,” a SECP statement said on Tuesday.

The commission will engage the services of professionals/experts as deemed necessary and ensure fair and early disposal of this investigation, it said.

“The SECP believes that sanctity of trading information holds paramount importance for growing confidence of investors in the capital market and any leakage/unauthorised access of trading data qualifies to be a criminal offence under the relevant laws.

“Such unlawful access and leakage puts the investors at inherent disadvantage and may also expose them to unwarranted risks.

“The SECP remains committed to ensuring protection of interests of investors at all times and take stern action against any illegal activity in the capital market of Pakistan,” the SECP release added.

A decade-old issue

A senior PSX official added that this is not a new issue.

“It has remained there for over a decade now. The SECP has investigated the same issue at least three to four times during the last 10-years and every time the raised complaints are found baseless,” he claimed.

Last year, the official said PSX hired an external auditor, Grant Thornton, to investigate a particular complaint. The eventual report did not find any guilty parties, he added.

“The PSX has received no such complaints in the last one to two months and fails to understand why SECP has initiated an investigation into the issue now.”

He, however, opined that some brokers may have approached the SECP instead of PSX to get their complaints registered.

“The PSX has spent around Rs200-250 million in the last three years to establish a well-equipped security department at the bourse. The primary objective of setting up the department is to keep the confidential data secured,” he said.

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