The management of the Karachi Stock Exchange (KSE) has sent a following signed appeal to the Securities and Exchange Commission of Pakistan (SECP). "Kindly refer to recent exchange of correspondence between KSE and the Commission, on phasing-out of COT with Margin financing. In this respect, a short while earlier, the management for the Exchange received a written representation from more then 75 members of the Exchange, a copy of the same is enclosed herewith.
The management wishes to submit to the esteemed Commission that though the condition of freezing COT positions on April 29, 2005 as contained in the revised structure of COT phase-out (SECP letter No SMD/SE/2(20)2002 dated April 18, 2005 & KSE Notice No KSE/N-2460 dated April 19, 2005) was agreed & consented by the KSE delegation, authorised by the Board: nevertheless is repercussions on the market were not fully contemplated at that time.
The same has been reflected in the above-mentioned members' representation.
While taking this opportunity, we submit that, to-date, 22 scrip have already been phased-out smoothly & efficiently, whereas the remaining 7 are blue chip & comparatively have higher turnovers and positions in Ready as well as COT Markets. Keeping this in view, the Board of Directors requested the Commission to revise the COT Phase-Out Plan and the same was kindly accepted by the Commission.
However, it has been observed that the condition of freezing COT positions on April 29, 2005 has caused nervousness amongst the market participants in anticipation of hardship that after April 29, 2005 the financees may not be able to square their COT positions in Ready Market on time. This will lead to selling pressure and may adversely affect the market sentiment.
In view of the above submissions and with the prior approval of the Board of Directors of the Exchange through circular resolution, we request the esteemed Commission to kindly waive the condition of freezing COT positions on April 29, 2005 from the revised COT Phase-Out Plan. Nevertheless, all the other conditions as given in the revised plan shall remain the same."
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