The broker directors of Karachi Stock Exchange (KSE) have disagreed with the SECP's proposal to restrict clients to just one percent of the free float of particular scrip. The KSE system can only check trading by its members and not that of their clients while accepting the imposition of 5 percent of the free float limit on a member in a particular scrip.
The broker directors said the restriction of one-percent limit was impractical as a client could be operating with more than one broker and they cannot have prior knowledge before arranging the funding under the CFS system.
A knowledgeable source told Business Recorder that a practical method to break the impasse between Securities and Exchange Commission of Pakistan (SECP) and the KSE could be diluting the final limit per client and requiring compulsory disclosure by a client upon crossing the one percent limit.
Non-disclosure can be checked at the end of the day based on UIN system or in a post audit. Imposition of a penalty or fine upon non-disclosure would be a sufficient deterrent. Haroon Askari, Chief Manager (Operations) in a statement said that as desired by the SECP chairman a meeting of the Directors and Management of the KSE was held here on May 05, 2007.
The Chairman SECP and senior officials of the Securities Market Division, SECP, all KSE Member Directors, Acting Managing Director and senior management KSE, attended the meeting. Many matters including CFS limit, client-wise position limits in CFS market and Financial Institution's Margining System were revived in the meeting.
After discussion, the SECP advised the KSE to submit detailed workings, justifications and rationale for meaningful consideration of the revision in the existing CFS limit of Rs 55 billion. In respect of client-wide position limits in CFS market, the commission advised that KSE would forward its observations/apprehensions to the commission at the earliest. Other limits as prescribed by the commission should be enforced.
With regard to FI's Margining System, the SECP chairman emphasised on early development of systems and procedures along-with the relevant regulatory changes at KSE and NCCPL. During the meeting, a few issues including Criteria for selection of CFS scrips and Cross Transactions and free delivery in the CDS were raised by the SECP for discussion. The SECP chairman advised the KSE Directors/Management to give their views on the above subjects at the earliest.
The SECP advised all the three stock exchanges to implement revised eligibility criteria of CFS Eligible Securities with effect from May 21, 2007. This criterion will replace the existing Eligibility Criteria for Deliverable Futures Market.
POSITION LIMITS ACROSS MARKETS IMPLEMENTED WITH IMMEDIATE EFFECT:
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CFS Deliverable Futures Cash Settled Future (CSF) Ready Market
(Position limits shall be Contracts (DFC) Contracts Contracts
based on the (Cumulative Position (Cumulative Position limit (Position limit will be
CFS released and not limit bused on the total based on the total open based on the volume
settled plus open interest In a ,crip interest in a scrip across all in a scrip)
unreleased 2nd tickets across all Derivatives Derivatives Contracts)
Purchase of CFS financees Contracts)
====================================================================================================================================================
Market wide 40% of free-float for each 4% of free float of each scrip for KSE and 15% of free- 100% of free-float
position limit scrip at KSE and 15% of float for UTS.
free-float for UTS.
Member wide 5% of free-float of the Scrip None
position limit for KSE member. 2% of free 5% of free-float of the scrip for KSE member. ~% of free-
(member's float of the scrip for UTS float of the scrip for UTS member.
position includes member.
all its clients'
positions)
Clientwide 1% of free-float of the scrip l% of free-float of the scrip for each individual client. For None
position limit for each client of member Financial Institutions and Mutual Fund clients trading at the
(This limit is also Client position will be KSE/LSE/ISE, each such institution will have a limit of 5%
applicable to universal and determined on of' the free-float. (Client position will be universal and
the member's UIN basis). determined on UIN basis).
proprietary
position)
Member Net 15 times the NCB of 10 times the NCB of member 25 times the NCB of
Capital Balance member member
(NCB) limit
(with immediate Maximum exposure of 15 times the NCB of member for CFS. Cash Settled Future and
effect) Futures Deliverable contracts.
Maximum exposure of 25 limes the NCB of member for CFS, Cash Settled Future, Future Deliverable
contracts and Ready Market.
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ANALYSIS OF CFS ELIGIBLE SECURITIES NON ELIMINATED SECURITIES:
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Avg. Daily
Impact Cost Free Float equal to or Average Daily Turn
of less than more than 50 million Over more than Current Outstanding
No Symbol 1% shares 500,000 shares CFS as at May 03,
2007
===========================================================================================================================
1 NBP 0.06 161,695,698 12,079,375 5,659,364,635
2 POL 0.06 88,964,148 4,885,838 4,036,656,925
3 MCB 0.07 204,735,716; 5,522,361 874,003,665
4 OGDC 0.08 202,130,701 18,778,257 6,290,856,540
5 PPL 0.08 137,167,529 9,964,362 7,392,658,050
6 PSO 0.09 70,522,184 2,509,131 2,417,748,495
7 BOP 0.10 117,609,334 16,252,730 2,057,433,415
8 PTC 0.14 S78,Z03.921 10,173,475 632,433,450
9 ENGRO 0.16 75,705,339 2,752,139 1,540,163,750
10 PICIC 0.17 350,088,304 4,425,516 1,295,206,675
11 OGDC 0.18 138,295,171 14,103,552 2,969394,925
12 FABL 0.18 148,300,452 3,880,787 354,566,910
13 FAFL 0.18 150,000,000 12,643,254 1,139,826,400
14 ACBL 0.19 100,216,620 8,059,667 2,192,826,450
15 LUCK 0.21 79,012,500 13,095,213 2,030,511,835
16 FFC 0.21 271,410,827 906,220 182,119,465
17 FFBL 0.23 326,938,500 12,798,852 1,044,803,350
18 NML 0.26 72,629,872 3,819421 728,208,440
19 KAPCO 0.32 132,037,984 6,221,082 1,874,209,125
20 HUBC 0.35 752,150,352 4,441,270 483,836,325
21 PICB 0.46 82,046,250 776,492 128,086,625
22 SSGC 0.49 201,352,299 1,532,656 252,724,775
23 FCCL 0.53 188,749,006 7,995,016 450,834,850
24 ANL 0.64 156,355,029 1,974,738 1,192,065,125
25 MLCF 0.72 148,905,343 2,941,131 148,286,425
26 BOSI 0.74 110,279,362 1,624,492 116,476,050
27 SNBL 0.75 96,729,360 571,943 91,204,500
Total 47,576,907,175
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TOTAL SCRIPS 27 SECURITIES ANALYSIS OF CFS ELIGIBLE SECURITIES ELIMINATED SECURITIES:
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Avg. Daily
Impact cost Free Float equal to or Average Daily Turn
of less than more than 50 million over more than Current Outstanding CFS
No Symbol 1% shares 500,000 shares as at May 03, 2007
=====================================================================================================================
1. FEROZ 1.71 2,511,680 -
2. PCAL 1.63 3,902,250 2,638,100
3. MTL 1.46 5,466,407 1,475,530
4. THALL 1.72 5,855,683 4,955,950
5. PRL 1.34 6,250,000 48,519,335
6. AHSL 0.26 6,750,000 771,905 1,012,871,080
7. APL 0.37 8,000,000 90,836,300
8. BOC 1.19 8,089,725 847,825
9. SEPL 2.17 10,001,731 19,000
10. NETSOL 1.28 12,418,700 119,580,025
11. PKGS. 1.21 13,975,901 81,974,750
12. PSMC 0.81 14,027,019 45,252,615
13. ACPL 2.11 14,432,573 25,251,010
14. FNEL 1.64 17,500,000 134,697,150
15. STPL 1.13 17,578,458 24,266,850
16. ATRL 0.45 18,195,810 115,482,435
17. KOHC 1.29 18,506,251 807,549 88,226,240
18. INDU 0.91 19,650,000 95,129,265
19. EFUG 1.55 20,000,000 151,470.850
20. JOVC 0.34 25,500,000 2,573,852 387,096,100
21. ICI 0.54 29,012,619 84,296,610
22. CHBL 3.11 29,772,566 2,778,200
23. NCL 0.86 30,080,335 49,969,745
24. PAEL 1.36 33,598,034 264,786,940
25. DFML 1.80 38,536,628 5,351,200
26. CTTL 0.35 42,488,114 2,144,792 625,310,200
27. ABL 0.76 44,886,412 644,272 248,865,340
28. SNGP 0.56 49,918,667 571,790 85,914,365
29. AICL 0.17 49,981,633 2,141,697 1,267,423,750
30. CHCC 1.58 54,023,484 6,052,075
31. SPCB 1.20 57,712,500 1,020,508 114,894,700
32. PIOC 1.11 64,993,550 817,151 44,925,275
33. DCL 1.72 82,500,000 2,691,713 86,706,475
34. PRCBL 0.82 109,574,868 12,562,600
35. DSFL 1.43 128,212,379 1,038,533 21,897,200
36. BAHL 0.92 131,466,694 11,968,400
37. TELE 1.37 165,000,000 2,212,402 62,935,800
38. TRG 1.69 168,608,416 4,490,508 337,549,200
39. PIAA 2.03 179,580,086 20,185900
40. PCCL 1.72 203,051,366 2,217,615 96,416,275
41. WTL 1.49 228,888,026 2,615,443 458,511,275
42. PPTA 1.43 378,551,802 1,011,689 22,743,800
43. JSIB 0.89 - -
44. KESC 1.51 658,353,749 1,218,590 16,558,750
Total 6,380,194,485
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