Badla is back!

A regulator is an umpire or judge and should behave like one. He is required to be neutral and come to a reasoned decision after examining the facts. And once he comes to that decision, he should stand firm. If he backs down, the system will fail to deliver.

But firmness doesn’t appear to be the strong point of the Securities and Exchange Commission of Pakistan. The Regulator had announced that margin financing is now on and that badla (brokers’ financing) would die a time-bound death. Stock-market investors were coming to terms with the situation and learning to play within their limits. While margin financing was becoming
acceptable to investors dealing in stocks, the Regulator changed his mind.

Banks to join National Clearing House: margin financing system mechanics decided

A nine-member committee has been formed to smooth the transition from COT (Badla) to margin financing. Comprising four bankers and five brokers, the committee would have former governor of the State Bank of Pakistan and now President of Metropolitan Bank, Kasim Parekh, as its chairman. In a series of meetings held at the State Bank of Pakistan Head Office on Saturday, chaired by the Governor of State Bank of Pakistan and attended by Minister of State for Finance Omar Ayub Khan and Chairman of Securities and Exchange Commission of Pakistan (SECP) Dr Tariq Hasan.

Banks to join National Clearing House: margin financing system mechanics decided

A nine-member committee has been formed to smooth the transition from COT (Badla) to margin financing. Comprising four bankers and five brokers, the committee would have former governor of the State Bank of Pakistan and now President of Metropolitan Bank, Kasim Parekh, as its chairman. In a series of meetings held at the State Bank of Pakistan Head Office on Saturday, chaired by the Governor of State Bank of Pakistan and attended by Minister of State for Finance Omar Ayub Khan and Chairman of Securities and Exchange Commission of Pakistan (SECP) Dr. Tariq Hasan.

Assessment of liquidity in stock market: Shaukat summons adviser, SBP governor

Prime Minister Shaukat Aziz has summoned his Adviser on Finance Dr Salman Shah and State Bank Governor Dr Ishrat Husain to assess the placement of liquidity in the stock market for phasing out of COT (badla) with margin financing. At present, Salman and Ishrat are in the US to attend International Monetary Fund and World Bank spring meetings. They are scheduled to return on April 25. Now they would report in Islamabad directly.

Badla phasing system extended

The Securities & Exchange Commission of Pakistan (SECP) has accepted the demand of the Karachi Stock Exchange (KSE) related to badla phasing system from margin financing, which failed to cheer the investors’ mood on Tuesday. The SECP, through a letter, informed the KSE which later on circulated as a notice for all members. The letter said that the Commission is pleased to note that the KSE board has decided to implement a number of the terms and conditions, agreed to by the Commission and the KSE in the meetings held on April 16 and 17, 2005, which are essential to ensure the smooth phase-out of COT.

Badla rates fall

The phasing out of badla market and enough liquidity in the system reduced the carry over rates to 16 percent at KSE on Friday, down by 440 basis points from last Friday. Declining Badla rate reflects genuine buying and excess availability of funds. One reason for this is the gradual phase out of leading stocks from the Badla market. Supply of funds has also improved after low activity in the future market, where some institutions had invested significant amount of money in the ready-future hedging.

Consultation on badla issue concludes

A five-member Karachi Stock Exchange committee left for Karachi after concluding dialogues here on stringent conditions from Securities and Exchange Commission and prolonging badla trading for few more months. Badla phase-out, which had been given soft schedule, is still in higher preference for Karachi market traders, while the SECP considers it a real source of recent crisis and over-speculation in the market. The SECP officials asked the delegation in two-day talks to limit the powers of brokers in time and value of their exposure if they use badla, to avoid over-speculation.