By Our Correspondent
LAHORE: The Indian capital market officials suggested elimination of all constraints to make the demutualisation experience successful and invited Pakistani stock market members to visit Delhi Stock Exchange (DSE) too.
The Indian stock market officials delegation was in Lahore and participated in the 2nd Indo-Pak Economic Conference concluded on Tuesday under the banner of Aman ki Asha. During there visit to Lahore Stock Exchange here on Wednesday, they shared their own experiences of demutualization at a luncheon hosted by the Lahore Stock Exchange (LSE) for the visiting dignitaries of Indian Capital Market.
The delegation comprised of Mr. Joseph Massey, CEO, MCX- Stock Exchange, India and Chairman, South Asian Federation of Exchanges (SAFE), Dr. Dalbir Singh, Chairman, Delhi Stock Exchange (DSE), and other directors of DSE, Justice Vinod Kumar, Mahendra Nath, Vijay Kumar and Anuj Chowdhry. The delegation held discussions with the Board of Directors and members of the Committee overseeing demutualization at LSE.
Speaking at the occasion, Mr. Joseph Massey of MCX-SX said that although Pakistan’s capital market is underdeveloped, this can be a blessing in disguise as it offers the strategic investors a huge upside potential. However, in order to turn this opportunity in Exchanges favor, the Exchanges must show an ability and willingness to grow. The Exchange must try to fully project its potential in its business plan. Without these it will be very difficult to attract strategic investors, let alone contemplate sale at favorable valuation. Commenting on restriction proposed to be placed on issuance of trading rights post-demutualization, he said that restriction of any sort that can hamper Exchange’s business especially its revenue streams will not be viewed favorably by any investor and therefore Exchanges must try to avoid this.
Massey also commented that if Indian investors are allowed to take strategic ownership stake in Pakistan’s Exchanges, many Indian financial institutions may be interest in exchanges such as LSE.
Aftab Ahmed Ch, MD/CEO of the LSE in his welcome address said the timing of this visit cannot be any better as the Exchanges in Pakistan were in the process of demutualization. “We can learn a great deal from the experiences of Delhi Stock Exchange and MCX in a post-demutualization environment”, he said. He also said that the visit of Indian business community will play an important role to increase trade and cross border activity in the back-drop of granting India MFN status and positive measures being taken at both sides in these regards. The Indian business community is visiting Pakistan to participate in a two-day conference of Indo-Pak businessmen and look for opportunities to increase trade & finance between the two countries.
He informed the delegation on the LSE preparation in general and the legislative framework laid-down for demutualization. The Delhi Stock Exchange and all other stock exchanges had been demutualized in 2007; MCX-SX was formed in 2008 as demutualized exchange as well. All Stock Exchanges in Pakistan have started the process of corporatization & demutualization to be completed in 119 days following the enactment of Stock Exchanges (Corporatization, Demutualization & Integration) Act, 2012 on Monday, May 7, 2012.
Representatives of Delhi Stock Exchange while sharing their experiences stressed that in the post-demutualization stage, only technology driven exchanges will be able to compete locally as well as globally. The DSE for that very reason has extensively invested in its IT infrastructure.
Dr. Dalbir Singh pledged DSE’s full support and knowledge sharing for the LSE. He also invited members and official of the LSE for visit to the DSE.