Financiers, brokers enjoying win-win position

One of the simplest characteristics of the bourses all across the globe is that some investors make smart profits while others lose money in the speculative equity markets. But, there are some permanent profit-makers i.e. brokers and financiers who are always in a win-win position whether the markets are rising or falling.

The position of the financiers and brokers would become more secure than ever thanks to the SECP’s recently introduced revised Risk Management System (RMS) that was otherwise generally believed to protect the interests of investors, leading analysts observed.

Brokers allowed pledging CFS-financed securities

The Securities and Exchange Commission of Pakistan (SECP) has allowed the broker CFS financier to pledge CFS-financed securities with the stock exchange as deposit against exposure. In a notification issued here on Thursday, the SECP said that such pledging will only be allowed in the case of proprietary CFS financing by the broker.

Consequently, from November 6, 2006, CFS financed securities which are lying in a separate blocked CFS account in the name of the said broker CFS financier may be pledged with the stock exchanges in settlement of the brokers’ exposure commitment.

CFS limit raised to Rs 55 billion: VaR implementation delayed

After a detailed meeting with the stock exchanges management, the Securities and Exchange Commission of Pakistan (SECP) on Thursday enhanced the CFS limit to Rs 55 billion for Karachi Stock Exchange (KSE); Rs 10 billion for Lahore Stock Exchange (LSE) and Rs 5 billion for the Islamabad Stock Exchange (ISE) from November 6.

It also delayed implementation of value at risk (VAR) management system till December 4. It was also due to come into effect from November 6. The SECP and stock exchanges management also reached an amicable solution to VAR management system and institutional margining. The SECP team was headed by its chairman, Raziur Rehman Khan. He was assisted by securities market division commissioner Rashid I. Malik.

SECP lifts ban on short selling from Nov

Securities and Exchange Commission of Pakistan (SECP) on Wednesday decided to lift ban on short selling in futures contract from November 2006 with a condition of making necessary changes in the KAT – the trading software at Karachi Stock Exchange (KSE).

At the same time, SECP has turned down the KSE proposal to allow short selling in October 2006 futures counter that was the long standing demand of local bourse.

KSE big fish vying to arm speculators

The Karachi Stock Exchange (KSE) has recommended to Securities and Exchange Commission of Pakistan to let ‘in-house financing’ (Badla) continue for another 30 days, instead of putting a ban on it from October 2, an official source confirmed to The News here on Tuesday.

If the SECP, the apex regulator, accepts the proposal, in-house financing would be available till November 1, 2006.

Moreover, the Karachi bourse had also asked the SECP about the lifting of ban on short-selling in 30-day futures contracts, the source added.

SECP takes U-turn on its commitments

This time too, the toothless watchdog – Securities and Exchange Commission of Pakistan (SECP) – accepted the backdoor recommendations made by the managements of three bourses at a meeting held here on September 11, 2006.

In other words, the commission declined its own proposal it made on August 30, 2006 to modify Continuous Funding System (CFS).

Surprisingly, SECP has raised the number of Continuous Funding System (CFS) eligible scrips approximately to 40-45 with effect from October 02, 2006 (The final number of scrips under this system depends on the eligibility criteria SECP put forth).

CFS cap raised to Rs55bn, badla banned

Continuous Funding System (CFS) cap has been enhanced to Rs55 billion from Rs24.5 billion for Karachi Stock Exchange.

The new CFS cap for Lahore Stock Exchange has been enhanced to Rs10 billion and Rs5 billion for Islamabad Stock Exchange, with effect from October 2, 2006. The decision was announced following a meeting between SECP and management of three exchanges here on Monday.

Reviewing the August 02, 2006 decision taken by SECP, the meeting observed that work on SECP’s proposal regarding CFS MK II was underway. However, to improve the risk management system and reduce the systemic risks associated with the existing CFS as well as in-house badla financing, it was important to take certain measures in the interest of the market for an interim period, a statement issued by SECP said.

Rules for CFS implementation notified

The Karachi Stock Exchange (KSE) has released rules and regulation pertaining to ‘continuous funding system’ (CFS) started from Monday on real time basis while the limit has been reduced by nearly Rs 500 million, following consent from the management of the Exchange.

THE NOTIFICATION SAID:

1.ENTERING PREMIUM PERCENTAGES INSTEAD OF PREMIUM RATES: In order to limit the CFS premium rate up to 18 percent, the TWS operators would enter the percentage at the time of seeking funding by the Financee, rather than placing the premium rate in the absolute form.

2. CAPPING OF CFS TO RS 25 BILLION:

Stocks futures decline

The stocks futures open interest at Karachi Stock Exchange fell during last week, and settled at Rs 15.3 billion on Friday, December 16, as selling in some scrips forced the investors to offload their positions.

Futures contract investment fell by Rs 0.75 billion from previous Friday’s (December 9) open interest of Rs 16.04 billion. The decline in open interest was caused by intra-day corrections during the week where equity prices used to rise in the early part of the trading session, only to see a great chunk of those gains wiped off by the end of the trading session.

Stocks futures decline

The stocks futures open interest at Karachi Stock Exchange fell during last week, and settled at Rs 15.3 billion on Friday, December 16, as selling in some scrips forced the investors to offload their positions.

Futures contract investment fell by Rs 0.75 billion from previous Friday’s (December 9) open interest of Rs 16.04 billion. The decline in open interest was caused by intra-day corrections during the week where equity prices used to rise in the early part of the trading session, only to see a great chunk of those gains wiped off by the end of the trading session.