The Karachi Automated Trading System (KATS) used by the Pakistan Stock Exchange (PSX) has been considered outdated as a system as it reportedly contains loopholes and security voids that can cause risk to the reliability and integrity of the financial market in the country. KATS has been withdrawn and replaced causing a buzz on mainstream and social media.
The concerns in the market are not entirely due to the unresolved issues in the system or the introduction of a new system but also due to the timing of the switch. The time coincided with the rollover week and also led to the dampening of the expected bull run after the successful trip of Prime Minister Imran Khan to Saudi Arabia alongside the agreement reached between the government and the Tehreek-e-Labbaik Pakistan (TLP).
The PSX CEO has assured that the new system was adopted in close coordination with all the stakeholders including brokers but Head of Online Trading at AKD Securities Haris Aslam expressed surprise at the replacement of the new system without a proper backup plan. He is of the view that the new system has the capability of delivering but he feels a steering committee that comprises IT experts and brokers to fix all the issues on a priority basis before the system’s re-launch is needed.
As per the official statement issued by the PSX, the major issues were linked to the locally developed front-end interface Jade Trading Terminal (JTT) and the main trading platform from China’s Shenzhen Stock Exchange met all the expectations.
The SCS Head of Strategy Faisal Shaji suggested the PSX management should engage with the best local vendor to develop a seamless interface for the new trading system to make sure it is utilized at an optimum level instead of creating a bottleneck.
Most of the young traders these days are tech-savvy, and occasionally find the old system lacking many features that are essential including the ability to put a trailing stop loss. The combination of the lack of features and the constant issues on mobile and desktop trading apps is seen as extremely troublesome by these young traders who can also compare it with other emerging and frontier markets.
As per a report from the National Clearing Company of Pakistan Limited (NCCPL), there are 264,525 active registered unique identification numbers (UINs) till October 2021. Nearly 30,000 new UINs have been registered since February of the ongoing year and a large number belongs to overseas Pakistani investors who opened their accounts via the Roshan Digital Account (RDA) initiative. Although these overseas investors are mostly new to the PSX, many of them have ample exposure in the global markets and are fully aware of the international best practices.
These overseas Pakistani traders have excess liquidity which is sufficient to fill the void created by the constant exodus of foreign investors from our markets. If the PSX management plans on keeping these traders engaged and further increasing their participation, it has to provide these well-versed investors the resources and infrastructure to at least keep up if not exceed the global benchmarks.