Badla phasing system extended

The Securities & Exchange Commission of Pakistan (SECP) has accepted the demand of the Karachi Stock Exchange (KSE) related to badla phasing system from margin financing, which failed to cheer the investors' mood on Tuesday. The SECP, through a letter, informed the KSE which later on circulated as a notice for all members. The letter said that the Commission is pleased to note that the KSE board has decided to implement a number of the terms and conditions, agreed to by the Commission and the KSE in the meetings held on April 16 and 17, 2005, which are essential to ensure the smooth phase-out of COT.
Now, the badla phasing out would start from June 8, and end on August 3 as compared to earlier plan of phasing out to end on June 3. During these two months, the badla would be reduced gradually in seven companies - Pakistan Telecommunication Company, Hub Power Co, National Bank of Pakistan, Pakistan Oilfields Ltd, DG Khan Cement, Oil & Gas Development Company, and Pakistan State Oil Ltd.
The decision of the Board on the freezing of members' COT positions in the remaining seven scrips with effect from April 29, 2005 is critical in ensuring that the exposure of members in the COT market is limited, and the amount of COT does not increase. Further, the gradual reduction in the amount of COT over a two-month period is intended to avoid the ballooning effect which would make it difficult to phase out COT within the specified time-frame.
The letter also said that COT positions of the members shall be gradually reduced over a period of two months. However, this is not properly reflected in the proposal forwarded by the KSE on Monday.
HENCE A REVISED SCHEDULE HAS BEEN FORWARDED BY THE SECP AS FOLLOWS:
THE PHASING OUT OF COT WILL BE AS FOLLOWING SCHEDULE:

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Scrip Existing  Extended    Period during    Week Period

    phase out  period for    which COT         reduction

      date    phasing out  position will  of outstanding

              wef June       be reduced         position

                3, 2005

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PTC    Apr 22    Aug 03      June 8 to   12.5%   8 weeks

                 Aug 3

HUBCO  Apr 29    Aug 03      June 8 to   12.5%   8 weeks

                 Aug 3

NBP    May 06    Aug 03      June 8 to   12.5%   8 weeks

                 Aug 3

POL    May 13    Aug 03      Jun 8 to   12.5%    8 weeks

                 Aug 3

DGKC   May 20    Aug 03      Jun 8 to   12.5%    8 weeks

                 Aug 3

OGDC   May 27    Aug 03      Jun 8 to   12.5%    8 weeks

                 Aug 3

PSO    June 03   Aug 03      Jun 8 to   12.5%    8 weeks

                 Aug 3

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