Karachi Stock Exchange, Securities and Exchange Commission of Pakistan agree for Deliverable Futures Contract market

Karachi: A meeting between Securities & Exchange Commission of Pakistan SECP and Karachi Stock Exchange (Guarantee) Limited KSE agreed for Deliverable Futures Contract market after discussing prevailing market situation and possible measures to be taken to address issues faced by the market in particular persistent low trading volumes and lack of retail participation.

Chaired by Chairman SECP and attended by chairman, member directors KSE Board, senior management of Exchange, SECP, senior market participants, it discussed various developmental areas including KSE’s proposal for amendments in Deliverable Futures Market DFM & Margin Trading System MTS. Measures agreed include Initial Margins to be collected 50% in eligible Securities and 50% in cash, Mandatory Basic Deposit requirement to take part in DFM shall be withdrawn, A voluntary “Roll-over Facility” shall be allowed for DFM via a special window to be devised and provided by the Exchange for purpose of showing rate of interest at which transaction is offered to be rolled over, All other specification of DFM contracts including collection of mark to market losses to be collected in cash shall remain as per existing Rules and Regulations.

A KSE press release Monday said in relation to MTS, SECP consented to look into possibility of allowing individual investors to take part in MTS market as financiers. Also it was agreed that FPR (Finance Participation Ratio) ratio shall be reviewed for accepting about 10% eligible securities within overall 25% cash requirement while keeping collection of mark to market margins in 100% cash.

Further, in order to encourage and enhance trading activity in various market segments, it was agreed to review existing list of eligible securities in MTS, DFM & Margin Financing with a view to increase number of eligible securities to help increase daily trading volume with wider participation from all particularly by retail investors.

Chairman SECP reassured participants that apex regulator will continue to work in close coordination with the Exchanges and play a facilitators role for development of capital markets and enhancing investors’ confidence. He emphasized upon Exchange to take concrete measures for educating investors particularly retail investors here and abroad by organizing Road-Shows, Conferences, Seminars.

Chairman KSE thanked Chairman SECP for taking this initiative and his keen interest in resolving capital market issues. KSE on its part will also do whatever is needed for reaching out to Investors and resolving all pending issues, so that they are willing to invest and participate vigorously in the market.

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