ISLAMABAD Since Chairman Karachi Stock Exchange Zubyr Somroo is one of the few expert voices, so far, against revival of notorious Badla, vested interests are ganging up for early introduction of so-called leverage product under new name as Margin Trading System. According to sources, both in the market and Securities and Exchange Commission of Pakistan (SECP), almost all stakeholders including the government and the regulator itself were covertly favouring the reintroduction of Badla, the indigenous way of financing carryover transactions. Like the vested interests, the responsible stakeholders namely the government and the SECP were supporting the introduction of MTS perhaps being convinced of the general argument that it would boost volumes of trade on the bourses. From the governments vantage point, more volume in the market means more taxes. Similarly, the SECP would get more money in terms of its fees and charges if the volumes in the market would grow, the sources said. Now the question arises here that whether or not the introduction of the MTS would boost the volumes of the market? A majority of stock players following the line of the Karachi Stock Exchanges Board of Directors argue that recent decline in the market was due to delays in the introduction of the MTS. But they simply ignored that recent declines in the market were due to a number of reasons; downward trends in the global markets these days; Pakistans economy facing serious difficulties; and floods increasing them. Given all this it was but nanve to say that the recent declines at KSE were because of the delays in approval of this product. According to sources, the Government has been blatantly ignoring the basic issue of corporate governance and that was the conflict of interest. Going by the virtue of the Asian Development Bank funded capital market reforms (that actually created the SECP, besides restructuring the board of the bourses) the brokers ought not to be on the Boards of the bourses. Or at least, the stock exchange members called brokers should not be dominating the Board of Directors that is basically their frontline regulator. Another pertinent question is why taskforce under Justice (Retd) Saleem Akhtar had termed this Badla as the main reason behind the mega crash of 2005 and had recommended not to allow any such products in future. The SECP with its own Chairman Salman Sheikh being in doldrums was in a catch-22. If the SECP approves the MTS, any subsequent crash or problem in the market would be termed as mistake on part of the Commission to allow Badla. On the other hand, the Commission was not only under pressure from the influential brokers but also wanted increased fees on higher volumes. That is why perhaps it has left the issue in limbo by conditioning its approval to doing away with the reservations of the KSE Chairman. Mala fide intentions on part of the KSE board of directors was also evident from the denial to postpone the meeting on the request of the Chairman KSE who sought at least two to three days time to study the product, the sources observed. Elsewhere in the world the margin trading systems were very much in vogue but they had nothing to do with the stock market managements as it is being used as financing instrument by the banks. Former Chairman SECP Khalid Mirza had proposed a similar system Continuous Financing System (CFS) that was initially opposed by the KSE but later introduced in phases. Eventually it also turned out to be a new version of the Badla and was eventually banned as such. Now with their position getting stronger day-by-day the vested interests are targeting the approval to the MTS in a months time or so brushing aside the reservations of the KSE Chairman, the sources maintained.