It is feared that Securities and Exchange Commission of Pakistan (SECP) and the Karachi Stock Exchange (KSE) meeting on September 20, Monday would mark the U-turn on capital market reforms meant for mitigation of both risk and conflict of interest in the capital market. Saner elements smell the rat after the SECP, the apex regulator of the corporate sector, has accorded a blanket approval to the KSEs concept of introducing a so-called leverage product with the name of Margin Trading System (MTS). Even the brokers themselves agree that MTS would be a new shape of the same old Badla financing that is considered an indigenous way of financing the players positions in the market. Prior to the other days emergent meeting of the Commission in which it decided to approve the concept of MTS with some additional risk mitigation measures the apex regulator had asked the frontline self-regulator KSE to address the reservations of its Chairman a nominee of the SECP. But even after this approval to the MTS, Chairman KSE Zubyr Somroo was not aware what exactly the SECP had added to the proposed system for risk mitigation, sources said. That showed that the SECP had simply succumbed to the political pressure influenced by the heavyweight market stakeholders vying for early introduction of the MTS as what they say cure to the problems like squeezing volumes, lake of price discovery, and liquidity. The advocates of the MTS, however, simply ignored the imposition of the Capital Gain Tax (CGT) for the first time since 1978 that could actually have pushed a majority of players on the sidelines or to the kerb market to result into volumes squeeze. At the same time the international markets decline in recent weeks was also a factor impacting on the local market in the same manner. Moreover the external environment especially the dwindling economy after the floods with governance failing to come out of the stigma of corruption on the apex administration level was another potent factor to dampen the short-term investment growth in the market. In fact, powerful brokers lobby that has now become the lobby of financial tycoons, courtesy the Musharraf regime, wanted to exploit the current market situation for revival of their favourite badla in any shape or shade and they did it successfully. Gauging lack of resistance from any quarter public or private, they are now intending to go for a U-turn on the capital market reforms that have come a long way since 1995 with help of Asian Development Bank in systematizing Pakistans capital market from a club of betters. That U-turn is so far, a vow on part of the brokers who were reportedly busy in some signature campaign to reverse the stock markets governance structure back to pre-reform system wherein only the members (brokers) of the respective stock exchange used to constitute Board of Directors as well as its Chairman. Given the precarious state of the SECP with its Chairman Salman Sheikh waiting for his tenure to complete in November as the government has already asked him to resign earlier the better, the brokers lobby seemed to be succeeding in their second but higher target after the MTS approval. The actual process of the capital market reforms that was the legislation for de-mutualisation of stock exchanges, corporatisation, and eventual what they call incestral listing was still pending with the Senate after the approval of the National Assembly. There too, some insiders believed, the influence of the big-fish of the market had worked well. The Finance Ministry that should intervene at this critical stage is already surrounded by the rumours of Finance Minister Abdul Hafeez Sheikhs exit and re-entry of his immediate predecessor back in his place after reports of the Ministry being in the dark about assessments of post-floods reconstruction cost.