The National Clearing Company of Pakistan Limited (NCCPL) has announced launching of "Financial Institutions' Margining System" (FIMS). The NCCPL has developed a complete risk management framework for Institutional Delivery System (IDS) transactions after due consultations with prominent financial institutions and market participants.
Securities and Exchange Commission of Pakistan (SECP) Chairman Razi-ur-Rehman, speaking as chief guest on the occasion at a local hotel here on Monday, said that it was very a unique product launched by the NCCPL. He appreciated the NCCPL's role, and said that after implementation of FIMS, the investors' capacity would increase as their investment would not stuck up for many days.
The implementation of FI Margining System at NCCPL was a step aimed at becoming a Central Counter Party and transfer Risk Management System which was presently carried out individually at all the three stock exchanges.
NCCPL Chairman Ali Ansari, in his welcome address, said that the NCCPL provided centralised services of clearing and settlement of securities to all the three stock exchanges of the country through the National Clearing and Settlement System (NCSS).
Besides, clearance and settlements of all trades and transactions, carried out at stocks exchanges, the company also provided other value-added services through a single settlement entity like Cross Exchange Netting, Broker-to-Broker Delivery System, International Delivery System, Margin Financing Module and others, he said.
He said the company had developed new products like Financial Institution Margining System, Continuous Funding System MK-II and others. The NCCPL introduced Institutional Delivery System (IDS) functionality in NCSS for execution of Non-Exchange Transactions between Broker Clearing Members and Financial Institutions (FIs) based on underlying Ready Market Trades and Continuous Funding System (CFS) Transactions in 2004, he added.
The IDS facilities the FIs in settling their exchange trades and transactions directly through the company instead of settling them through their brokers, he said, adding now the NCCPL would collect Exposure Margin and Mark-to-Mark Losses from these FIs through implementation of FI Margining System.
The NCCPL was considered to be the most suitable entity for direct collection of margins from FIs as majority of these FIs maintained direct relationship with the NCCPL being its Non-Broker Clearing Members, he added. NCCPL Chief Executive Officer (CEO) Muhammad Luqman also spoke on this occasion and briefed about the performance and the future plans of the company. A large number of dignitaries from capital market attended the event.
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