Cracks Down of SECP on Illegal Trading Activity

Cracks Down of SECP on Illegal Trading Activity

It has come to the notice of the Securities and Exchange Commission of Pakistan (SECP) that numerous unlicensed operators are carrying out illegal trading operations in currency/commodity futures, across various cities of Pakistan. These illegal trading/brokerage establishments are running a black market operation in collaboration with foreign counterparts, by using foreign trading platforms/exchanges. These operations invariably involve illegal money transfers, causing a loss of valuable foreign exchange.
It is pertinent to mention that such elements had previously also started their illegal operations in 2002-2003. Even then, the SECP took strict action, in collaboration with the State Bank of Pakistan against these criminal elements. That exercise had led to enforcement actions against 39 such establishments, including winding-up petitions filed against 14 companies, which include White House Securities, Wall Street Securities, Tycoon International, Exchange Impex and United Brokerage.

The SECP also added directors of certain companies on the ECL. This time the SECP has initially gathered preliminary data against over 30 illegal operators currently engaged in unlicensed trading activities. The SECP has decided to forward this initial list of illegal brokerage houses and their suspected agents to the FIA for an immediate crackdown.

This is the first step towards a comprehensive operation with the help of law enforcement agencies to target illegal trading/brokerage establishments, investors placing money into these illegal ventures, and operators of platforms involved in the entire spectrum of this heinous business. Other measures that the SECP intends to take to curb this illegal activity, include educating local investors, coordinating with its foreign regulatory counterparts, and utilizing its international linkages including bilateral treaties with various jurisdictions to eradicate this menace.

The SECP is confident that cracking down on the black market will go a long way in protecting investors, raising government revenues by transforming the illegal into legal activity in the regulated and documented sector, and saving the foreign exchange currently being sent abroad. It is important to highlight that those investors who wish to undertake trading of commodities and currencies futures can do so through the platform of Pakistan Mercantile Exchange (PMEX), which offers numerous products and has a large body of legal brokers involved in this business