Karachi  - Partial ownership of Pakistan's largest stock exchange would be up for grabs in early 2009 to a strategic investor if a reform bill is approved, officials said.

Early this week, Pakistan's cabinet approved the legislation, which was expected to be cleared by the parliament this month.

The bill would offer a 60-per-cent stake in the Karachi Stock Exchange (KSE), which has a market capitalization of 64 billion US dollars, to the general public and a consortium of strategic foreign investors.

"The bill will eliminate the monopoly of a few brokers, and it would enable more people to take part in capital market transactions," Information Minister Sherry Rahman said.

For the past six decades, the Karachi bourse has been a closed club of 200 brokers and their rich families, who have been accused of manipulating the market to their own benefit.

Anybody else who wants to be a member of this elite club needs to buy a seat at a hefty sum through these brokers or their families. The bill under consideration, however, would lower those fees.

"The bill's approval is a significant development in our efforts to demutualize the KSE by 2009," said Adnan Afridi, managing director of the Karachi Stock Exchange.

Afridi said the exchange's management has received several written and verbal offers from the world's leading stock exchanges and Western financial institutions looking to buy into the Karachi bourse but the bourse is not considering any offer for the time being.

But according to a top insider, Dubai's bourse, the Dubai International Financial Exchange (DIFX), is one of the favorites among the management of the Karachi exchange.

"Yes, Duabi's DIFX is among the financial institutions that have shown interest in the Karachi Stock Exchange," Afridi said.

"We will offer 20 per cent to the general public and the rest of 40 per cent to a strategic foreign investor," Afridi said.

Afridi said that once parliament approves the legislation, his team would have 120 days to formulate plans for the sale and carry out road shows around the world.

The Karachi exchange has undergone a stratospheric rise during the past six years and was named the best performing Asian market by the US magazine Business Week.

A majority of the brokers are staunch supporters of embattled President Pervez Musharraf, whose decision to support the US fight against terrorism after the September 11,
2001, terrorist attacks brought billions of dollars into Pakistan.

This influx took the benchmark KSE-100 Index from around 900 to more than 15,000 points in early April.

But the index has lost more than 22 per cent of its value during the past six weeks because of political uncertainties amid rising demands from the fractious parliamentary coalition for Musharraf's resignation and impeachment.

"Our market is still very attractive and extremely cheap as compared with the rest of Asia, and every IPO [initial public offering] in the past was oversubscribed four to five times," Afridi said. (dpa)