The Security And Exchange Commission of Pakistan has issued an order to investigate few brokers who have been allegedly involved in market manipulation through misleading trading activities. SECP did not reveal any names as yet to avoid alarming the public, but it has directed its officials to address this issue by taking aggressive policy measures and ruthless enforcement, if the need be. Therefore, it wouldn’t be wrong to say that the battle between apex regulator of the stock market and market manipulators has now been unofficially ensued.
The statement emerges a day after SECP said that it has filed a criminal case against a leading brokerage house. For quite some time, market manipulators have been defrauding the public by engaging in deceptive trading practices. One of the many practices is spoofing, a trading process in which brokers enter bids and offer with the intent to cancel them before trade execution, and sketching a false market activity by entering fake bids or offers.
“These securities brokers deliberately interfered with the workings of the market to defraud investors,” it said in a statement.
For those who are not familiar, such sort of manipulation leads to large movements in prices of securities that cannot be justified by any economic logic. Further, this type of manipulation may also have a negative impact on investor’s confidence and hurt the perception of a stock market as if it’s a rigged casino.
Three months ago, SECP asked the surveillance team of stock market to analyze index movement trends in order to identify those who are involved in market manipulations. Detailed analysis of KSE-100 index movements during that period highlighted that some securities brokers were noticeably involved in deceptive trading. In any case, we’ll keep a tab on the upcoming trends of SECP to keep our readers updated.