Margin Trading System: reservations of KSE''s chairman to be discussed in BoD meeting

The reservations of KSE''s chairman on Margin Trading System (MTS) would be discussed in the next board of directors meeting of the exchange to be held on August 26, 2010. The KSE board meeting was held on Thursday; however the chairman of exchange Zubyr Soomro was not present in this meeting.
It is learnt that the KSE board discussed various internal issues; however the matter of Chairman''s reservations on proposed leverage product was not discussed in this meeting. It was decided that the next board meeting would be held on August 26, 2010 and this issue would be discussed in the presence of KSE chairman, a board member said.
It is worth mentioning here that the KSE board of directors had approved the proposal of MTS. However, the KSE Chairman Zubyr Soomro expressed reservations with the proposed product of MTS approved by the KSE board of directors. In his note on dissent regarding proposed MTS sent to Securities and Exchange Commission of Pakistan (SECP), Soomro was of the opinion that the proposed system could cause systemic risk as he counter party risk provided to finance would be from KSE and not the borrowers.
Further, he feels that the formula adopted for minimum capital eligibility is not up to international standards. He also stressed about the needs to audit the whole UIN issued so that the anti money laundering requirements as per law are fulfilled.