ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has been held responsible for the stock market crash in 2008.
According to an inquiry report, former SECP chairman Raziur Rehman, took unilateral decisions at that time, while then finance minister Shaukat Tarin influenced the decision about removing the floor on trading.
The findings of the inquiry committee, headed by Shamim Ahmad Khan, revealed that the SECP did not take any notice of the market situation. Similarly, there was complete absence of coordination between SECP and State Bank of Pakistan regarding stock market crisis of 2008 that had swept over trillion rupees from the market.
The committee became inactive due to Shamim Ahmad Khan’s resignation. However, the SECP Chairman, Zafar Hijazi, reactivated the committee and approved revised terms of references (ToRs) in January 2015. As per revised ToRs, the committee was mandated to study the factors leading to the 2008 crisis, rationale for imposing of the floor by the exchanges under their risk management system (RMS) regulations and review the impact of imposition of the floor on the market. The committee was also asked to give policy recommendations based on the experience of the 2008 crisis.
The committee submitted its report to the SECP on June 5, which the SECP presented to the Policy Board in its meeting held Monday. The report analyses the causes, events, impact and outcome of the 2008 market crisis primarily with a ‘lessons learned’ objective. The Board decided to deliberate on in its next meeting.
