MTS and Futures: KSE to allow securities as margins

The Board of Directors of Karachi Stock Exchange (KSE) on Tuesday decided to allow securities as margins in Margin Trading System (MTS) and Futures, it is reliably learnt on Wednesday. Sources said the KSE board has taken this decision with a view to enhancing trading activity at the Pakistan''s premier bourse, which saw drastic decline in the volumes in recent days.
The decision taken in the KSE board meeting would be subject to approval of the Securities and Exchange Commission of Pakistan (SECP), they added.
Presently only cash margins are accepted in the MTS and Futures.
The board focused extensively on resolving difficulties faced by the investors on the one hand and strengthening the exchange''s risk management aspects to provide confidence to market participants on the other. Besides this, in order to enhance product attractiveness, several initiatives were also discussed, that also include option trading. The board emphasised on informational security and level playing field for all investors.
In addition, the following market related decisions were taken:
1. Approval was accorded to ToR of following committees:
i. Development & Trading Affairs Committee
ii. Voluntary Delisting Committee
2. Approval of following regulatory amendments, subject to approval of the SECP:
i. Regulations Governing Risk Management to allow placing of circuit breakers on first Trading Day of unpaid Right Allotment Letter and newly listed securities on Ready Market.
ii. Regulations for Short Selling to allow short selling without uptick rule subject to average turnover limits.
iii. Listing Regulations to allow forfeiture of application money paid by sponsors, in case of withdrawal of voluntary delisting application.
iv. General Regulations with respect to Standardised Account Opening Form and consequential actions upon suspension, expulsion or default of a member in terms of joint standard follow-up procedure as agreed with CDC and NCCPL.
v. Members'' Default Management Regulations and General Regulations to seek authority for utilisation of all assets, including securities held in House/Main Accounts of expelled/defaulter members.
vi. Regulations with respect to options trading.
3. Approval of addition of mandatory settlement field in Off-Market Reporting Interface on NCHS.
4. Issuance of ten (10) trading hall passes to each member for their clients and/or employees.
5. Grant of extension of 30 days'' period to dispose-off of appeal filed before the board committee by a member against an order of the management committee imposing penalty.