March 19 (Bloomberg) -- Pakistan fined its three stock exchanges for imposing trading curbs last year, the first action by the regulator against the bourses after the restriction.

Competition Commission of Pakistan imposed a 6 million rupee ($74,626) penalty on the Karachi Stock Exchange, it said in a statement yesterday. It also fined the Lahore Stock Exchange 1 million rupees and the smaller Islamabad bourse 200,000 rupees.

“It is a healthy sign for the market development,” said Habib -ur-Rehman, chief executive officer at Atlas Asset Management Ltd. in Karachi, who manages $45 million worth of assets. “This practice of unnecessary intervention in market should be discouraged, it has harmed the market in many ways.”

The curbs, which had prevented the benchmark Karachi 100 Index from trading below its close on Aug. 27, were lifted on Dec. 15. The gauge has fallen 31 percent since the limit was removed, while the MSCI Asia Pacific Index dropped 5.3 percent.

The curbs “had broad consequences on the economy,” the regulator said. “While the Islamabad Stock Exchange had been rather contrite, both Karachi Stock Exchange and Lahore Stock Exchange were not.”

Daily trading on the Karachi exchange is 155 times that of the Islamabad bourse, according to Amjad Iqbal, head of quotations at the Islamabad Stock Exchange. The regulator said the impact from the smaller exchange was “somewhat de minimis.”

The restriction was introduced a month after investors threw stones and smashed windows at the Karachi exchange to protest the worst losing streak in at least 18 years.

Karachi Stock Exchange will meet with its lawyers before deciding on challenging the order by the regulator, Managing Director Adnan Afridi said by telephone today.

To contact the reporters on this story: Khalid Qayum in Islamabad at kqayum@bloomberg.net

Last Updated: March 19, 2009 01:50 EDT