PSX MD Unveils the Best Risk Management Practices

Pakistan Stock Exchange Managing Director and Chief Executive Officer (CEO), Farrukh H Khan said the exchange had adopted best practices in risk management to safeguard investors and ensure their smooth functioning.

After its launch in Jan this year, the exchange had to trigger Market Halt for nine times, he said in an exclusive interview with APP.

“I can assure you that the market halt routine is a standard in-line procedure with international best practices to safeguard investors and the overall functioning of the market,” he remarked, clarifying that it was not anything to be alarmed or concerned about.

He said the market halt protocol was appropriate because of extreme volatility to avoid any situation of uncertainty that occurs on the market. The market halt is triggered by the KSE 30 Index reaching 5 per cent in either direction or staying there for 5 minutes, whereupon the market is halted for 60 minutes.

Marks to market margins are collected during this time, and investors are given a cooling off opportunity to evaluate the market and think about their strategy. The halts reduce the risk and help stabilize the market in periods of extreme volatility.

Speaking about the state of regional and existing global stock markets in the midst of the Covid-19 pandemic, he said the situation had resulted in global market downturn.

He said, however, that PSX management took care of the situation before lockdown, with the required measures in place at the exchange to arrest the risk of virus transmission, while ensuring that business continuity plans are re-tested and in effect. “We implemented some administrative steps early on before the lockout, including a manual attendance program, monitoring the temperature of all visitors to PSX,” installed hand sanitizers, decreased footfall and decreased attendance by 50 percent of the Exchange workers by facilitating the employees with work from home policy.

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