Two criteria for selection of Margin Eligible Securities relaxed

In terms of the definition of Margin Eligible (ME) Securities prescribed under the Regulations Governing Risk Management of the Exchange, the Karachi Stock Exchange with approval of the Securities and Exchange Commission of Pakistan, relaxed the two criterions for selection of ME Securities in order to achieve the objective of enhancing the list of ME Securities in light of prevailing market conditions.
According to a KSE notice sent to all members on Friday, the KSE relaxed the following two criteria for selection of ME Securities.
1. Average Impact Cost of new Me Securities for last six months should be less then or equal to 2.5 percent instead of less then or equal to 2 percent.
2. Average Daily Trading Volume of new ME Securities in the Ready Market should be at least lower of 0.5 percent of its Free Float (FF) or 50,000 shares instead of 0.5 percent of FF or 100,000 shares.
Based on the revised criteria for selection of ME Securities, 50 ME Securities will be acceptable as collateral by the Exchange for all markets in accordance with the regulation effective from Monday, February 20, 2012, the date determined based on 30 days advance notice as required under clause 4.6(h) of the Regulations.
Furthermore, the Commission also approved the following valuation methodology of Treasury-Bills (T-Bills) as prescribed by the Exchange for their acceptance as collateral for all markets:
1. 2.50 percent haircut on daily valuation will be applicable.
2. T-Bills can be of any tenure.
3. All T-Bills must be released before 3 working days of their respective maturities and
4. All T-Bills will be daily valued based on the prices published by the Reuters.
Moreover, the Exchange has also been accepting electronic units of CDC Eligible open-ended funds as collateral for all markets, which are categorised as Money Market Schemes in accordance with the criteria prescribed by the Commission.
Therefore, the KSE advised the members to replace their collateral deposited with the Exchange in terms of securities which are not included in new list of 50 ME Securities, before February 20, 2012, failing which the Exchange reserves the right to value them as Zero from the effective date.
The revised list of Margin Eligible Securities acceptable as collateral effective from Monday, February 20, 2012 includes Allied Bank Limited, Arif Habib Corporation Limited, Adamjee Insurance Company Limited, Askari Bank Limited, Azgard Nine Limited, Attock Petroleum Limited, Attock Refinery Limited, Bank Al Falah Limited, Bank Al Habib Limited, Bank of Punjab Limited, Byco Petroleum Limited, Dawood Hercules Limited, DG Khan Cement Limited, Descon Oxychem Limited, Engro Corporation Limited, Engro Polymer Company Limited, Faysal Bank Limited, Fatima Fertiliser Company Limited, Fauji Fertiliser Bin Qasim Limited, Fauji Fertiliser Company Limited, Habib Sugar Mills Limited, Habib Bank Limited, Hub Power Company Limited, ICI Pakistan Limited, Jahangir Siddiqui Company Limited, Kot Addu Power Company Limited, Lotte Pak PTA Limited, Lucky Cement Limited, Mari Gas Company Limited, MCB Bank Limited, Meezan Bank Limited, National Bank of Pakistan, Nishat (Chunian) Limited, Nishat Chunian Power Limited, Netsol Technologies Limited, Nishat Mills Limited, Nishat Power Limited, National Refinery Limited, Oil and Gas Development Company Limited, Pak Reinsurance Limited, PICIC Growth Fund, Pak Oilfields Limited, Pak Petroleum Limited, Pakistan State Oil Company Limited, PTCLA, Sui Northern Gas Pipelines Limited, Sitara Peroxide Limited, Sui Southern Gas Company Limited, Thal Limited and United Bank Limited.
The current list of banks of which Bank Guarantee will be acceptable includes Allied Bank Limited, Askari Bank Limited, Bank Alfalah Limited, Bank Al Habib Limited, BankIslami Pakistan Limited, The Bank of Khyber, Habib Bank Limited, Habib Metropolitan Bank Limited, JS Bank Limited, KASB Bank Limited, MCB Bank Limited, National Bank of Pakistan, NIB Bank Limited, Summit Bank Limited, Soneri Bank Limited and United Bank Limited.
The list of open-ended funds acceptable as collateral for all markets effective from February 15, 2012 are Askari Sovereign Cash Fund, JS Cash Fund, KASB Cash Fund, MCB Cash Management Optimizer Fund, Meezan Cash Fund, NAFA Government Securities Liquid Fund, Pakistan Cash Management Fund, UBL Liquidity Plus Fund and ABL Cash Fund.