ISLAMABAD Succumbing to the pressure of influential brokers, the Securities and Exchange Commission of Pakistan (SECP) on Wednesday finally approved the concept of Margin Trading System (MTS) which is said to be the revival of notorious badla financing. According to a press release of the SECP, the Commission in its meeting held here approved the MTS concept with additional risk mitigating measures. The board of directors of the Karachi Stock Exchange other than its Chairman Zubyr Soomro had approved the concept of MTS. Soomro had not only vehemently opposed the concept during the meeting but also wrote a dissenting note. The SECP later on asked the KSE board to address the reservations of Chairman Soomro as a pre-condition to the approval of the MTS concept. Now SECP did not mention anything about the issues pointed out by the KSE Chairman and simply approved the controversial system which is to revive the good old badla financing that was declared as root cause to all major crashes and crises in the stock market. Brokers were however happy after the SECP approval to the MTS. They believe that the volumes of trade would pick-up and the market would achieve much desired price discovery. According to the SECP the MTS concept was also reviewed and approved by an Independent Committee of Professionals constituted by the SECP. The Committee submitted its report in July 2010. Board of Directors of the three stock exchanges and the National Clearing Company in their subsequent meetings approved the Report of the Committee. The recommendations of the Committee in relation to the MTS were reviewed in detail by the SECP in the Commission meeting. The SECP approved MTS with certain amendments to further strengthen risk management and provide for measures to curtail systemic risk, in the interest of the market. The Commissions approval to MTS would be followed by necessary amendments to the draft Securities (Margin Financing, Securities Lending and Borrowing and Pledging) Rules, 2010. Thereafter, the same will be forwarded to the Government for promulgation.