The Lahore Stock Exchange achieved another unique milestone in the capital market history of the country by becoming the first exchange in Pakistan to launch the SMS trade alerts and email notifications directly to the investors to inform them about their trade executions.
This step has been taken to enhance the transparency in the order executions by the exchange brokers whereby the Exchange would inform the investors directly about their symbol wise gross trading position so that the instances of fictitious trading in the investors account could be checked.
The SMS trading alerts will also function as a record for the investors by apprising them about their daily transactions to eliminate the possibility of any dispute that could generate other wise. Mr. Aftab Ahmad Chaudhary, MD/CEO of Lahore Stock Exchange while briefing the journalists about the importance of the initiative stated that some very recent defaults of the brokers had highlighted that certain dishonest brokers from all the Exchanges had sold the shares of the clients from the sub accounts of the brokers without any knowledge of the investors thereby causing huge financial losses to the investors.
MD LSE informed the media persons that such instances had been increasing after the 2008 crisis. He informed the media persons that during 2010 all exchanges, CDC and NCCPL had jointly worked on the project of the automation of the securities transfers whereby the securities against market trades were only allowed to be moved directly from/to respective Sub Accounts based on the UIN number used for trading. He said that despite this improvement, LSE still faced a number of defaults by the brokers during the last couple of years wherein the defaulting brokers completely wiped out the accounts of the investors by selling all securities lying in the sub accounts of the investors.
MD LSE informed the media that in order to further improve the system, LSE had taken up the matter with CDC and as a result, CDC introduced two new improvements in its regulations/practices. He said that under one modernization, many free delivery options for the transfer of shares from the investors sub accounts were disabled for regular usage and were made subject to additional documentation from the brokers and on the mandatory identification of the target UINs of the investors. He said that under the second improvement, CDC has introduced the practice of sending automatic SMS alerts to CDC sub accounts holders whereby the process of the flow of information to the investors has been improved thereby adding to their protection.
Mr. Aftab stated that the start of trade alerts by LSE is the next step of ensuring that the investors are informed on regular basis about the executions of their orders. He informed the media persons that LSE shall be providing services of SMS/email alerts to clients without assuming any responsibility of accuracy of the orders. He said that since it is the brokers who are supposed to act on the orders of the investors, therefore there may be instances when a broker executes a trade at two different exchanges. The trade alerts from LSE would only capture the details of the order executions at LSE on UIN basis. He said that the Trade alerts would work as an early warning system to the clients who could instantly approach the brokers in case of any problem in the accuracy or the sufficiency of the trades. He said that the trade alerts would also work for the benefit of the brokers in cases where certain dishonest investors also lodge wrongful complaints in case their trading positions end up being in loss.
At the end of the briefing, Mr. Aftab stated that no measure or improvement can be fool proof and it is the duty of the investors to ensure the effective oversight of their securities. Therefore, he advised the investors to remain vigilant and always ensure to safeguard their investments. He said that the investors must inform the Exchange instantly on any suspicion of wrong doing by the brokers.