Stock exchange review sought

The National Business

By CLARISSA MOI
THE PNG Securities Commission is eyeing a review in the Port Moresby Stock Exchange (PomSox), especially the trading and listing rules as well as ownership.
PNG Securities Commission (Secom) executive chairman Christopher Hnanguie told The National that there were no specific rules and regulations guiding the stock exchange since the capital market was formalised.
He said 85 per cent of it was borrowed from Australian Stock Exchange (ASX) and had been used over 20 years.
Hnanguie said the coming into force of the Capital Markets Act 2015 had advanced the legal framework of the country’s capital market.
He said adopting foreign trading rules have their own shortcomings, among them the irrelevance to the local context.
Hnanguie said the country was driven by small-to-medium enterprises (SMEs) who mostly sought financial support from banks without realising that there were also capital market to benefit from.
“If we are going to promote investments and get the public to come in and participate in the economy, we need to start building up the country’s capital market,” he said.
“We need to reform the PomSox trading platform to gradually introduce SMEs so they can raise capital and expand. “
Hnanguie said reforms in the Pomsox were bound to generate some positive impacts to the capital market and the wider economy.
Among them would be:

  • Investor confidence in the Pomsox and the PNG capital market;
  • new incentives and clarity to firms to list on PomSox; and,
  • Streamlining the rules to meet local context.
    Hnanguie also said change in ownership was among the reforms at the Pomsox.
    “Over the years, the PomSox has been owned by the Kina Securities Ltd (KSK) and BSP Capital, the only two licensed brokers in PNG,” he said.
    “In normal free market economies, it is not appropriate for the only two stock brokers to own the only stock exchange.
    “This is usually prone to price fixing and insider trading, and calls to question issues relating to governance and transparency.
    “Under that arrangement, our market has not expanded.
    “There is limited transparency, fairness or safety of investment, which has created a venue for market misconduct like insider trading, price fixing, and abuse of public funds by some publicly-listed firms.”
    Hnanguie said under the current reforms, 50 per cent ownership
    of BSP Capital was moved to
    Pacific Capital Markets Development Pty Ltd (Australian firm), while 49 per cent still remains with KSL.
    “It would be good to see the ownership of Pomsox further diversified to allow other public institutions like NasFund and Nambawan Super, or the involvement of foreign stock exchanges such as Tokyo Stock Exchange, New York Stock Exchange and Toronto Stock Exchange,” he said.
    This would help improve the trading platform and bring in both technology and expertise to further expand the market.”