Lower, upper breakers restored to earlier levels

KARACHI - Securities and Exchange Commission of Pakistan (SECP) has reversed the earlier amendment to the lower and upper circuit breakers levels and resumed the previous 5 per cent lower and upper circuit breakers levels.

Moreover, short sale will be allowed as per the Regulation governing Deliverable Futures Contract, which includes short sale on "uptick" and "zero tick".

Decision to these effects was taken in a meeting held among officials of the SECP and the three stock exchanges on Friday under the chairmanship of Razi-Ur-Rahman Khan, Chairman SECP, to review the market situation since the adoption of above-referred measures. All the three stock exchanges appreciated the initiatives taken on June 23, 2008 for providing necessary cooling period essential for the market to recover from the state of affairs at that time.

Securities & Exchange Commission of Pakistan (SECP), on the recommendation of the Board of Directors of the Karachi Stock Exchange (KSE), had approved adoption of various market stabilization measures on June 23. As announced, those measures were of temporary nature and were to be reviewed again.

1. The upper and lower security-wise Circuit Breaker for each Market separately (except Stock Index Futures Market) shall revert back to 5% or Re 1/-, whichever is higher from the Closing Price of the previous day, as specified in the Regulations governing Risk Management of the Exchange with effect from Monday, July 14, 2008.

2. Short sale will be allowed as per the Regulation governing Deliverable Futures Contract which includes short sale on "uptick" and "zero tick". Additionally CFS buy positions will not be considered as pre-existing interest, unless such positions are released prior to making such sale. These changes will be implemented with effect from August futures contracts.

It was also agreed that the members shall not be allowed to make Short Sale unless the trade is so declared at the time of placement of order through the automated trading systems of the stock exchanges in a special Short Sale Order Window which will be available to market participants prior to the start of August Deliverable Futures Contract.

3. Short Sale will be allowed in Ready Market subject to meeting the pre-requisites as mentioned in the Regulations for Short Selling under Ready Market, 2002. In order to ensure that there is no market abuse of blank selling, short sale with pre-existing interest against purchase on another Exchange will only be allowed subject to implementation of inter-Exchange UIN regime.

4. Further, acceptance of Bank Guarantees from "A" and above rated banks have already been allowed.

 as Collateral, in respect of Exposure Margins, Mark-to-Market Losses and where applicable Special Margins and the relevant Regulations have also been updated accordingly.