KARACHI: The Pakistan Stock Exchange (PSX) has said it received a total of 485 claims, amounting to Rs1.2 billion, against the recently defaulted broker, M.R. Securities.

It also disputed rumours about the number and amount of claims. The PSX conveyed thisinformation to a full bench of the Securities and Exchange Commission of Pakistan (SECP) in a meeting on Tuesday.

The PSX board shared findings and recommendations of an internal enquiry into the recent broker default and the role of the chief regulatory officer (CRO) of the exchange in timely detection and reporting of the same, the PSX said in a statement.

The board decided to suspend the CRO pending an enquiry.

The PSX release stated the SECP chairman emphasisedthe need for implementing reforms for investor protection in a forceful and timely manner.

In order to strengthen the capacity of the PSX as a frontline regulator, the exchange agreed to putin place a stronger inspection regime for brokers.

It also agreed to estabbsh a national level brokers` association as a self-regulatory organisation under SECP Act 1997.

In line with international best practices, the mandate of that associadon should, inter alia, include formulating the necessary code ofethicsforits members and instituting disciplinary policies/procedures for non-compliances of relevant regulatory framework.

`The SECP communicated that considering risk to investor arises substantially through custody of clients` assets with brokers, not all brokers should be allowed to keep custody of clients` assets, which the PSX agreed,` the press release said.

The PSX board informed the SECP that out of ñve broker defaults post-2008, all pending claims against three brokers will be fully satisfied through the sale of their assets, whichis in progress. There were pending litigation cases against the other two brokers. The SECPadvised the PSX to provide fortnightly updates on all pending cases to the commission.

The PSX was further directed to expedite the implementation of regulations relating to the standardisation of the brokers` back ofñce software as advised by the SECP previously, which could have played a critical role in avoiding the recent broker defaults.

The SECP stressed upon the PSX to introduce stringent requirements for opening and operaung branch ofñces by brokers as well as strict monitoring of such branch ofñces for regulatory compliance to ensure investor protection and discourage brokers from circumventing regulatory requirements.

The SECP chairman expressed his concern over some single-member companies acting as stockbrokers and directed the exchange to ensure all such brokers convert to a private or public company within the specified time period.

`This was essential to provide for necessary corporate setup, code of ethics, effective compliance f r amework and protection of clients` assets,` the SECP chairman said.advised the PSX to provide fortnightly updates on all pending cases to the commission.

The PSX was further directed to expedite the implementation of regulations relating to the standardisation of the brokers` back ofñce software as advised by the SECP previously, which could have played a critical role in avoiding the recent broker defaults.

The SECP stressed upon the PSX to introduce stringent requirements for opening and operaung branch ofñces by brokers as well as strict monitoring of such branch ofñces for regulatory compliance to ensure investor protection and discourage brokers from circumventing regulatory requirements.

The SECP chairman expressed his concern over some single-member companies acting as stockbrokers and directed the exchange to ensure all such brokers convert to a private or public company within the specified time period.

`This was essential to provide for necessary corporate setup, code of ethics, effective compliance f r amework and protection of clients` assets,` the SECP chairman said.