|
KARACHI : The Securities and Exchange Commission of Pakistan (SECP) has reverted the upper and lower security-wise circuit breaker to 5 percent or Re 1, announcing strict monitoring of market activities, especially with reference to blank sales in excess of allowed limit and other market manipulations.
This decision was taken in a meeting of officials of the SECP and the three stock exchanges on Friday under the chairmanship of SECP Chairman Razi-Ur-Rahman to review the market situation since the adoption of above-referred measures. The meeting also decided to allow short sale as per the Regulation governing Deliverable Futures Contract, which includes short sale on "uptick" and "zero tick".
Earlier on June 23, 2008, the SECP, amending the regulations, imposed a ban on short selling, besides upper security-wise Circuit Breaker increased to 10 percent and cut the lower lock up to 1 percent aimed to give a exit to the small investors.
However, no more positive effects were witnessed in the market, and market remained in bearish trend during the last few weeks. The meeting also indicated that Equity Market Opportunity Fund (EMOF) would be launched as soon as formal approval and financial commitment from these institutional investors is received.
After the meeting, a joint statement of SECP and Karachi Stock Exchange said that in view of continuous declining trend in the markets and consequent possibility of systemic risk resulting in disruption of timely and smooth settlement of trades, SECP, on the recommendation of the Board of Directors of the KSE had approved adoption of various market stabilisation measures on June 23, 2008.
However, those measures were of temporary nature and were to be reviewed again and, after thorough deliberations and with the consensus of all the three stock exchanges, new measures have been initiated.
As per decision, the upper and lower security-wise Circuit Breaker for each Market separately (except Stock Index Futures Market) shall revert back to 5 percent 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 will take effect from Monday, July 14, 2008. In another measure, SECP allowed short sale 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. During the meeting it was also agreed that short sale shall not be allowed 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 will be available to market participants prior to the start of August Deliverable Futures Contract. In addition, Short Sale will be allowed in Ready Market subject to meeting the prerequisites 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.
The joints statement said that acceptance of Bank Guarantees from 'A' and above rated banks have already been allowed as Collateral, subject to Board of Directors' approval of the respective stock exchanges, in respect of Exposure Margins, Mark-to-Market Losses and where applicable Special Margins and the relevant Regulations have also been updated accordingly.
Copyright Business Recorder, 2008 |
Print Version 
Send This Story 
