Security and Exchange commission of Pakistan (SECP) has finalised nine far reaching steps to further strengthen integrity and transparency in terms of price discovery and trade settlement in the equity market.
According to the SECP sources during the last financial year 2006-07 five measures were also introduced in the capital market which restored the investors confidence that resulted in the enhancement of market capitalisation which is new record.
Giving the details of certain steps being taken during the current financial years the sources said in order to facilitate transparent and efficient financing for the market, the SECP has proposed authorisation of direct leverage finance in the form of CFS Mark-II by eligible brokers, banks and non-banking financial institutions.
About the margin financing, the sources added that parallel with other modes of leverage financing SECP is continuing its efforts to promote margin financing. Margin accounts allow investors to buy shares with a relatively small amount of cash or margin up front by using the assets currently held in their accounts as collateral, they added.
Margin financing will effectively lead to monitoring of risk at three levels. At first, the exchanges will monitor the risk at broker level and secondly the broker will carry out due diligence of his customers, they said.
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