1. SUBJECT: PROHIBITORY ORDER UNDER SECTION 20 OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969 WHEREAS, it has been observed from examination of the trading data of Karachi Stock Exchange ("KSE") during the period starting from January 01, 2015 to February 06, 2015 ("the Period") that one of the client of MRA Securities (Pvt.) Limited ("The Brokerage House"), TREC Holder of KSE, has been actively placing orders in various scrips at KSE.
2. WHEREAS, review of the order level and trade level data indicates that quantum of trades executed by such client was very few in proportion to the orders placed by him. This leads to a detailed review of the order level data of the client.
3. WHEREAS, the detailed review of the order level data of the client of the Brokerage House, it has been observed that Mr. Tariq bearing client code 334015 against UIN 4210154429707 (hereinafter referred to as the Client), revealed that he had placed significant quantum of buy and sell orders in various scrips during the Period and out of which a large portion of the orders were cancelled/deleted within 05 seconds after placement of the same. The summary of the statistics is given as below: 4.
4. Client code Total orders placed Orders cancelled % Age of::i:i .Cancelled........
5. Orders. To . Total Orders: Orders cancelled within 05 seconds % Age of cantelled orders within 05 seconds to total cancelled Orders Sr. Name FIX19401 MEM19431 THM19402 1 Tariq 334015 4,250 1,947 45.81% 648 33.28% WHEREAS, detailed review of the order level data of the client revealed that out of 118 scrips, the client is practicing the major portion of such activity in 09 scrips which are usually illiquid. The client has significantly placed buy orders at upper lock of the scrips and cancelled within 5-10 seconds of its placement. The summary of the placement of orders and cancellation by the client is as under: Total Orders Placed Total Orders Cancelled No. Of orders cancelled within g, seconds No. Of orders cancelled within 10 seconds % Age of cancelled orders cancelled to total orders 753 635 479 517 84.33% 5. The scrip-wise detail of the orders placed and cancelled is as under: Scrip : Name Number of order place Of Order cancelled : %:Age Of cancelled orders Caneelled to total :orders Sr # No. Of cancelled : orders within :: 05 seconds to total ortieti %Age of cancelled orders: within 05 seconds to total*: Cancelled orders No of cancelled orders within 10 seconds to total orders % Ag of. ::: ::: cancelled *Rhin lo: seconds to total :! " :cancelled orders 1 ADDS 51 42 82.35% 34 80.95% 36 85.71% 2 AGTL 253 249 98.42% 212 85.14% 231 92.77% 3 ATIL 91 84 92.31% 50 59.52% 54 64.29% 4 CPPL 42 34 80.95% 29 85.29% 32 94.12% 5 MARI 161 110 68.32% 67 60.91% 75 68.18% 6 NMFL 7 7 100% 5 71.43% 5 71.43% 7 PAEL 6 6 100% 6 100% 6 100% 8 PIBTL 84 55 65.48% 43 78.18% 43 78.18% 9 TREET 58 48 82.76% 33 68.75% 35 72.92% Total 753 635 84.33% 479 75.43% 517 81.42% WHEREAS, the practice referred above adopted by the client of the Brokerage House is in conflict with the fair market practices, wherein the Client has indulged in a practice of placing large sums of orders with no intention to purchase or sale of shares. Please note that such pattern is detrimental to the interest of the investors for buying and selling of shares and create a false and misleading appearance of active trading in any security.
6. WHEREAS, the Brokerage House is responsible for each and every order placed or trade executed through its trading terminal. It is the exclusive responsibility of the Brokerage House that it should monitor all the trading activities being executed through its terminal and should keep track and prevent any transaction being made in violation of the applicable rules and regulations.
7. WHEREAS, being an active participant in the capital market, the Broker should be conscious of the responsibilities it is carrying. It is pertinent to mention here that orders which were placed by the aforesaid client of the Brokerage House were not placed with the intention of executing fair trade transaction in the capital markets and the same was overlooked by the Brokerage House.
8. NOW THEREFORE, in exercise of the powers conferred under Section 20 of the Securities and Exchange Ordinance, 1969, ("Ordinance") the Brokerage House is directed to prohibit such trading practices through its terminals, as referred above, which are not in line with the prevalent regulatory framework and constitute or is calculated to constitute contravention of any provision of this Ordinance and rules and regulations made thereunder. The Brokerage House is further directed to ensure meticulous compliance of the rules and regulations, failing which the Commission shall be constrained to initiate necessary legal proceedings against the Brokerage House.
9. It is to inform you that the Securities and Exchange Commission of Pakistan ("SECP") in exercise of its power conferred under Section 20 (6) (g) of Securities and Exchange Commission of Pakistan Act 1997, has suspended the UIN no. 4210154429707 of Mr. Tariq with immediate effect for a period of 01 year i.e. Till February 13, 2016. The client is only allowed to execute trade from his UIN exclusively for selling of his existing holding in the market at aprice suitable to him during the suspended period. However, this suspension will not be applicable on settlements which are pending. This Prohibitory Order is issued without prejudice to any other action that the Commission may initiate in accordance with the law on the matters subsequently investigated or otherwise brought to the knowledge of the Commission.