Islamabad: Farrukh H. Khan, Managing Director and CEO of the Pakistan Stock Exchange, said that the exchange has implemented best risk management practices to protect investors and ensure its smooth operation.
He said that since its implementation in January this year, the exchange has activated the market suspension 9 times. He said: “I can tell you that the market suspension procedure is a normal procedure in line with international best practices and can protect investors and the entire market operation.” This is not something to panic or worry about.
He said that when the downtrend of the KSE 30 index was 5%, the market stopped eight times; when the index rose 5%, the market paused once.
He said that the market suspension procedure is necessary to avoid market instability caused by extreme volatility. When the KSE 30 index reaches 5% in either direction and stays there for 5 minutes, it triggers a market pause, and then the market pauses for 60 minutes.
During this period, market-denominated profits will be collected, providing investors with a cool opportunity to evaluate the market and think about their strategies. Therefore, this pause can reduce the risk and help stabilize the market during times of extreme turbulence.
Speaking of the regional and current global stock market during the Covid-19 pandemic, he said that this situation caused the global market to fall.
However, he said that the management of PSX was responsible for this situation before the lock-in and took the necessary precautions at the exchange to stop the possibility of the virus spreading, while ensuring a retest and a business continuity plan.
“We took certain administrative measures early before the blockade, including a manual attendance system to check the body temperature of all PSX visitors”, installed hand sanitizer, reduced footfall, and remotely accessed employees by reducing employee attendance by 50% Work at home.
Speaking of a problem, he said that during the current downturn in the current crisis, long-term investors have the opportunity to enter and hold long positions in order to benefit from the attractive valuation now offered in the stock market.