SECP freezes share prices as KSE tumbles

KARACHI - The Board of Directors of the Karachi Stock Exchange on Wednesday exercising the powers described in the Regulations of the Exchange, decided to place a floor based on closing prices of securities of Wednesday, August 27, whereby the individual security prices will remain free to trade within the normal circuit breaker limits, but not below the floor price level as mentioned above. Meanwhile, the Securities Exchange of Commission of Pakistan (SECP) has endorsed the proposal of KSE directors moved earlier in the day to freeze the share prices, reported a private TV channel late on Wednesday night.

It was decided by KSE Directors to introduce the above mechanism effective from August 28, 2008 till further notice. Decision to this effect was taken holding extensive consultations with stakeholders (including its members, fund managers, other exchanges, etc) held an emergent meeting on Wednesday, a Press note issued by KSE said.

However, the regulator SECP has not given any decision yet to the proposal of the board of KSE in which the board demanding freezing of the stock market at 9,144 points amid continued recession and unabated downslide at the stock market since last Wednesday

But the board of KSE observed that the continuous sharp decline in share prices can have implications for the wider financial system. With this in mind, the Board, in terms of the powers described in the Regulations of the Exchange, decided to place a floor based on closing prices of securities of Wednesday. The Board will engage SECP, State Bank of Pakistan and the Ministry of Finance to develop medium term measures for achieving stability in the capital market.

The much-awaited decision was taken after the proposal sent by the KSE board to save the battered investors and members of the stock market from default.

However, some brokers of the KSE said that SECP has only verbally approved the demand of members and board of KSE but no official letter was received so far in this regard from the SECP.