LAHORE - Lahore Stock Exchange Managing Director Aftab Ahmed Ch has said the SECP is endeavouring to run the stock exchanges in a way that it could care for the interest of small investors instead of the members or brokers. He said that the Securities and Exchange Commission of Pakistan will give the final approval of the Marginal Trade Financing while its implementation will take at least two months. In a maiden briefing with the media after resuming charge of the MD, he said that the process of the demutulization of the stock markets is continuing as the SECP has signed an MoU with all the stock markets of the country and in this regard an act has been formed, however it is still to be implemented. He said that the LSE would pursue new companies to get listed at the stock markets and invest in shares trading to boost up the stock business in the country. He said the SECP is planning to pursue the companies being privatized by the government to issue their shares for trading at the stock exchanges. Mr Aftab said that the companies which are in profit for the last three consecutive years but not paying dividends to their clients will be complained to the SECP. According to the rules such companies should be delisted at once, he added. He said that stock exchanges have traditionally been acting as a club of brokers or members. He said that traditionally, the exchange has been a guarantee limited company, which means that a certain group of individuals came together and formed the stock exchange; and put the guarantee that they will contribute their share of the guarantee if the exchange fails to run smoothly as desired and will be liquidated thus. Presently, exchanges in the world are moving towards demutualization- a process which alters the structure of an exchange. It is to be noted that demutualization converts a guarantee limited company into a company limited by stocks as other listed companies on the exchange. It demutualizes a currently mutual exchange with one vote one member into a one vote per share. It changes the decision making structure from consensus based to majority based. Thus, the exchange would become a profit oriented company rather than the existing not-for-profit orientation. Traditionally, the exchange gave trading rights to owners of the exchange. Demutualization would separate trading rights from ownership. So, it means making the company a public limited company that is able to generate funds for itself like others, rather than be limited by the guarantee contributed by the members. According to experts, exchanges are not considered to be very efficient in maintaining transparency and have not been able, specifically in countries like Pakistan, to prevent insider trading. Their growth is also a major issue. There are points of view which enforce that this not-for-profit orientation of the exchanges has rendered them stagnant because they have limited access to capital this way. They also say that this mutual nature of the exchange leaves it nowhere in the competition when it comes to other trading systems. While supporters of the demutualization process say that it will eliminate conflicts of interest in decision making because now the owners will not be the managers themselves.