KARACHI: Pakistan Stock Exchange (PSX) has signed an agreement with Shenzhen Stock Exchange (SZSE) to acquire a $2.85 million Trading and Surveillance System, which would enable cross border trades, cross border listings and robust surveillance capabilities, Chairman PSX Suleman Mehdi said on Friday.

“It is a landmark achievement and a game changer for Pakistan. This system would connect PSX with SZSE, Shanghai Stock Exchange (SSE) and Hong Kong Stock Exchange (HKSE) opening the floodgates of Chinese investment into the country, and at the same time enabling locals to invest in any of these three exchanges,” Mehdi said at a press conference.

Chairman PSX informed that there were certain capital controls in China, which restricted Chinese to invest abroad.  “Therefore Pakistan government would have to negotiate a quota with the Chinese government to allocate a quota for Pakistan,” he said adding we have already forwarded a proposal to the Prime Minister in this regard.

“I would say $10 billion, but whatever quota is fixed, it would be completely exhausted as Chinese investors are really excited about the Pakistan’s equity and bonds markets, which are offering lucrative discounts.”

PSX Board in a meeting held on 26th September 2019, took the decision and approved the execution of the contract, which was signed in Shenzhen, China, earlier this week.

The additional benefits of the SZSE Trading System would be built-in risk management, market access, market data dissemination, market control, real-time trading system, disaster recovery & system operation, monitoring and management, growth enterprise market, bonds/term finance certificate trading, single stock option trading, index option trading and real time fault-tolerant system.

“A further additional interface is China Connect which can give PSX access to the other Exchanges that SZSE is connected to i.e. Shanghai and Hong Kong etc. This would open up the Asian market to PSX and Pakistan for business opportunities. Additionally, the improved data quality will compound PSX data vending potential and capability immensely,” Mehdi said.

The surveillance system consists of world class features and market surveillance tools and PSX stakeholders of the capital market will be direct beneficiaries

“In today’s fast changing technological world, a reliable, secure and efficient trading system is a basic requirement for PSX. Further, a robust and state-of-the art Surveillance System, is also an essential requisite as PSX is the only national exchange and the front line regulator,” said PSX Chairman.

“We have received immense support and applause from the Capital Market stakeholders, from the brokerage industry as well as the listed corporates as they all stand to benefit from the efficient operations, new product possibilities and surveillance capabilities that this system will bring”

Moreover, SZSE assured continuous technical support to PSX as a strategic partner post-installation of this system.

Suleman Mehdi also informed that market maker agreements had also been signed with ubl Asset Management Company and National Investment Trust, and PSX would launch its first Exchange Traded Fund (ETF) by mid January 2020. “Initially the ETF would comprise of 10-12 liquid securities, which could be increased afterwards.”