The Board of Directors of the Karachi Stock Exchange (KSE) has decided to invite Expression of Interest (EoI) for providing one-time financial assistance from the Member-Financees out of KSE's own funds for the payment of their final losses at National Clearing Company of Pakistan Limited (NCCPL) for CFS Mk-II positions, pertaining to the agreement with NCCPL.
In a notice sent to all members, the KSE said that the decision has been taken pursuant to the agreements by NCCPL with KSE Member Financees and Authorised Financiers (AF) with respect to the settlement of CFS MK-II positions as on December 24, 2008 and in view of the prevailing extraordinary circumstances, resulting in acute shortage of liquidity in the market. The KSE announced the following terms and conditions:
1. The Member voluntarily opting the "Squaring-Up Scheme" of NCCPL against his/its outstanding CFS MK-II position will only be eligible to avail subject financial assistance.
2. The Exchange may provide funds to the extent of Rs 50 million actual final loss, whichever is less, directly to NCCPL on behalf of the member in respect of final loss in CFS MK-II market repayable to the Exchange within the maximum period of 6 months.
3. In case the actual final loss requirement is higher than Rs 50 million the member shall pay any amount over and above the said Rs 50 million from his/its own sources and thereafter shall be entitled to the funds committed by the Exchange under Agreement to be executed between the Exchange and the concerned member.
4. The member shall execute a prescribed agreement with the Exchange undertaking to repay to Exchange the amount of financial assistance provided by the Exchange within six months from the date of payment by the Exchange to NCCPL on his/its behalf. However, the Member will have the option to repay such amount earlier.
5. The individual member shall provide his personal guarantee as per the format attached herewith in case of Corporate Membership, personal guarantees of two Directors, including the Nominee Director and another Director having majority shareholding in the company, shall be provided to the Exchange for faithful discharge of obligations undertaken by the member under the agreement.
6. The amount paid by the Exchange to NCCPL on behalf of member in pursuance of above referred agreement will carry mark-up rate of 6 months KIBOR+2% per annum prevailing on the date of agreement from the date of payment till actual date of repayment thereof the mark-up accrued on daily basis up to the last date of each month will be paid by the Member by fifth day of the following month Non-payment of mark-up on the due date will attract penal action as may be determined by the Exchange, including but not limited to suspension of membership.
7. The member shall not carry-out any trading in any market of the Exchange, except in Ready Market on T+2 basis up to the maximum exposure amount of Rs 25 million so long as any amount of final losses remains payable by the Member to the Exchange as per the terms of this agreement.
8. The member, so long as any amount remains repayable by him/it under the above-referred agreement, shall not exercise his/its right of nomination or change the shareholding of the company. The member shall affirm in the above-referred agreement that he/it has not created any third party interest in his Membership Card and shall not create any such right.
9. On member's failure to repay outstanding amount (principal plus mark-up within the stipulated time, the Exchange shall be at liberty to expel the member and thereupon his/its membership card and other assets including but not limited to office(s) within the premises of Exchange and securities held by the Exchange as margin against exposure shall vest in the Exchange. The Exchange, in such situation, may dispose of the membership card and other assets in such manner as it deems expedient notwithstanding anything contained in the Members Default Management Regulations, the Exchange shall have the first right to satisfy its claim under the above-referred agreement out of the proceeds of Member's assets in respect of payments made by it to NCCPL in respect of final losses of CFS MK-II (R) transactions. Further, the Exchange shall also have the first right to satisfy its claim in case the member is declared a defaulter for failure to meet his/its financial obligations under normal course and as per the regulations of NCCPL or the Exchange.
10. The Exchange shall enter into an agreement with NCCPL whereby NCCPL shall agree; and acknowledge the right of Exchange to satisfy its claim under this Agreement out of the proceeds of Member's assets in case of his/its default.
11. The member shall undertake in the above-referred agreement that he/it will withdraw all litigations pending in the Court in this matter, and shall not initiate any future litigation in this regard. In case of any pending litigation, the Member shall provide certified copy of Courts Order evidencing withdrawal of case(s) before availing financial assistance. Further, in case of default the Member shall neither create any legal hindrance nor obtain any sort of courts order restraining disposal of his/its membership card/seat by the Exchange.
12. In case the competent authority/court declares the disbursement of funds by the Exchange to NCCPL in pursuance of the above-referred agreement as illegal and of no effect, the Member shall undertake to repay forthwith the amount so paid: along with the accrued mark-up to the Exchange and further indemnify and keep indemnified the Exchange against all losses, claims, proceedings, action, damages etc as may be incurred or suffered by the Exchange arising out of disbursing fund to NCCPL on Members request.
13. All Member Directors of KSE Board are not eligible to avail this facility whether in individual capacity or in their capacity as a Director of a Brokerage House.
14. The Exchange may vary or modify or prescribe additional terms and conditions of the financial facility at any time at its discretion.
The members desiring to avail this financial facility may kindly review the above-mentioned terms and condition and apply on their letter-head to Operations Department of KSE (Attention: Abbas Mirza, Deputy General Manager, Operations) not later than 3.00 pm on Thursday, January 01, 2009. Any interests received after the deadline will not be entertained on acceptance of their application by the Exchange, the concerned Member will have to provide the following documents:
I. Duly filled, signed and stamped agreement on non-judicial stamp paper of Rs 50.
II. Board's Resolution in case of Corporate Brokerage House authorising to avail this financial assistance from KSE and execution of necessary documents by authorised persons named in the Resolution in this regard on behalf of the company duly certified by the Company Secretary or in his absence the Nominee Director.
III. Personal guarantee(s) of Individual Member and in case of Corporate Member personal guarantees of two directors, including Nominee Director and another Director having majority shareholding in the company, on non-judicial stamp paper of Rs 50.
IV. Attested photocopy of CNIC of individual Member/Directors as the case may be.
V. Certified copy of Court Order evidencing withdrawal of legal case, if applicable.
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