KARACHI: Stockbrokers have demanded that the chairperson of the Pakistan Stock Exchange (PSX) constitute an inquiry commission to look into the premature rollout of the new trading system by the exchange management that caused a “grave financial loss” to investors in the last week of October.

In a letter to PSX Chairperson Dr Shamshad Akhtar, the Pakistan Stockbrokers Association said the exchange should hold the officials concerned accountable for the botched rollout of the trading system, which replaced the 20-year-old Karachi Automated Trading System (KATS) on Oct 25 for one week.

Bought from China’s Shenzhen Stock Exchange (SZSE) at the price of Rs Rs461.26 million, its implementation led to thin volumes in subsequent trading sessions as users complained about the absence of basic features and frequent glitches causing trade execution delays.

The representative body of the stockbrokers accused the exchange management of taking “conscious actions” that set up the Chinese system to fail as its rollout was without a compatible front-end trading terminal.

The letter listed as many as 13 “causes of action” that seem to point the finger at PSX Managing Director Farrukh H. Khan whose “solo flight turned out to be catastrophic failure”. The association specifically asked the PSX chairperson not to include PSX Director You Hang to the inquiry commission. He was the deputy managing director when the PSX procured the system from SZSE. Mr You is also the authorised representative of the three Chinese shareholders — including SZSE that sold the trading system — on the PSX board.

The stockbrokers asked the PSX chairperson to ascertain whether the management issued any tender for the faulty front-end trading terminal developed locally by Catalyst IT Solutions. They also asked her to check if the management obtained the approval from the board of directors and whether a stress test was conducted before “go-live”.

The letter said the managing director took the go-live decision unilaterally despite a categorical note of dissent by 57 stockbrokers who constituted more than 40 per cent of the registered Karachi members.

“You’ll acknowledge that entire PSX management was reluctant to shift to the old system (after the botched roll-out of the new one) and made a false excuse that at least 48 hours will be required to migrate from JTT (front-end terminal) to KATS,” it said, noting that the exchange eventually gave itself less than 13 hours to do the same.

“Had this happened anywhere (else) in the world, all the related persons would’ve resigned themselves,” it added.

The PSX management was approached for comment, but it chose not to respond.

According to Bilal Farooq Zardi, secretary general of the association, the stockbrokers’ representative body had yet to receive any response from the PSX chairperson.

Published in Dawn, November 13th, 2021