CHI - Acting on the directive of Securities and Exchange Commission of Pakistan (SECP) over the removal of floor mechanism, the Karachi Stock Exchange (KSE) on Friday formally announced to remove the floor on the closing price of securities placed on August 28, 2008, from coming Monday (Dec 15).
The KSE in a official statement issued on Friday said that from coming Monday trading shall take place in the market in the ordinary course with normal trading parameters including application of standard up-side and down-side 5 per cent circuit breakers rule in place.
Meanwhile, National Clearing Company of Pakistan Limited (NCCPL) has turned down the request of KSE to extend the period of forceful roll over of Continuous Funding System (CFS) contracts to six months
The board of directors (BOD) of KSE had on Friday formally requested National Clearing Company of Pakistan Limited (NCCPL) to extend the period of forceful roll over of Continuous Funding System (CFS) contracts to six months.
At current there is worth Rs11 billion holdings placed in CFS market.
While the National Clearing Company of Pakistan Limited (NCCPL) (entrusted with organizing the CFS) had excused accepting the request of KSE, as it is not in NCCPL power to extend the period of forced roll over without the consent of apex regulator SECP, a reliable source said.
BOD of KSE held a meeting on Friday to review the decision made by SECP, in which the apex regulator had ordered all three stock markets of the country to remove the floor by December, 15.
However, the board of directors of KSE had decided to remove the floor from Dec. 15 and also decided to request the NCCPL to extend the forced roll over period to six month in order to avert the risk of further possible defaults within the first week of market opening.
A source who attended the meeting said that SECP had tied down the board of directors of all three stock markets and the boards of all three stock markets could not take any decisions, aiming to amend in the normal trading parameters of the markets.
In the light of this situation, the directors of KSE preferred to knock the doors of NCCPL to seek help than the doors of SECP, as the chairman of SECP Razi-ur-Rehman had clearly rejected the above mentioned request of the KSE during a series of meeting held between the both regulators to announce the date for removal of floor with one voice, source added.
Source said that NCCPL will inform the BOD of KSE on Saturday about its decision on whether the request of KSE is being accepted or not.
While a rumour was circulating in the stock market the BOD of KSE has requested SECP of extending "unfreezing" directives till the issue of CFS positions is resolved.
Commenting on this rumour, a broker said that such request would allow a wave of fresh air to enter the arena and it gave signal that both the regulators were discussing the issues in cordial environment.