PSX executes best risk management practices: MD PSX


From Business Correspondent

ISLAMABAD: Managing Director and Chief Executive Officer (CEO) of Pakistan Stock Exchange Farrukh H. Khan said that the exchange had Implemented best risk management practices to safeguard investors and ensure its smooth functioning.

The exchange had to activate Market Halt for nine times since its implementation in January this year, he said. “I can tell you that the market halt routine is a normal procedure in-line with international best practices to safeguard investors and the overall market functioning,” he remarked and clarified that it was not something to be alarmed or get anxious about.

He said that the Market Halt was activated eight times when the KSE 30 Index had a downside movement of 5% and once when the Index moved upwards by 5%.

He said that the market halt procedure was necessary to avoid any situation of instability arising in the market due to extreme volatility. The Market Halt is triggered when the KSE 30 Index reaches 5% in either direction and stays there for 5 minutes, whereupon the market is halted for a period of 60 minutes. During this period, mark to market margins are collected and there is a cooling off opportunity for investors to assess the market and think through their strategy. Hence such halts reduce the risk and help stabilise the market in times of extreme volatility, he told media.

Talking about the situation in regional and current global stock markets amid Covid-19 pandemic, he said that the situation had resulted in fall of markets globally.

However, he said that the management of PSX took charge of the situation before lockdown, with having necessary precautions in place at the exchange to arrest the possibility of spread of the virus, while making sure that business continuity plans are re tested and in place.

“We initiated certain administrative measures early on prior to the lock down, including manual attendance system, checking the temperature of all visitors to PSX,” installed hand sanitizers, reduced foot-fall and reduced attendance by 50% of staff at the Exchange by providing remote access to employees to work from home.

To a question, he said that at a time when markets were taking a downturn in the current crisis, there was an opportunity for long term investors to make an entry and hold long positions in order to reap the benefits of the attractive valuations now on offer at the Stock Market.


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