The National Clearing Company of Pakistan Limited (NCCPL) has completed all arrangements to launch three leverage products at all the three stocks exchanges soon. These leverage products, include Margin Trading System (MTS), Margin Financing System (MFS) and Securities Lending and Borrowing (SLB).
The NCCPL has been registered as an authorised intermediary for all three leverage products in accordance with Securities (Leveraged & Pledging) Rules, 2011 issued by the Securities and Exchange Commission of Pakistan (SECP) Accordingly, NCCPL will implement MTS, MFS and SLB at all the three stocks exchanges of the country in the capacity of authorised intermediary. The NCCPL will provide an automated portal to leveraged market participants to access leveraged markets through interface available to them electronically. The salient features of the leveraged products are given as under:
Margin Trading System: MTS is an efficient leveraged product with unique characteristics and robust risk management measures. MT Financing shall be made available only on pre-identified purchases with equity participation on un-disclosed basis between financees and financiers through NCCPL. Financing in MTS shall be allowed only in MT eligible securities. The maximum mark-up rate is capped at KIBOR+8 percent. All margins and marked-to-market losses are payable in cash only. Marked-to-market losses collected from financees will be paid to financiers on daily basis.
Margin Financing System: MFS will be executed on disclosed basis and will carry counter-party risk based on bi-lateral agreements between margin financiers and margin financees against net ready market purchases. MFS will be provided only in MF eligible securities as per agreed FPR (minimum FPR is 25 percent or VaR whichever is higher).
Securities Lending & Borrowing: SLB market shall be provided by NCCPL on un-disclosed basis through an automated portal. SLB provides a mechanism for temporary exchange of securities with an obligation to redeliver the same securities in the same number at an agreed premium on a future date. SLB is designed to earn income/return on idle securities and provides an effective solution to mange delivery defaults. All margins and marked-to-market losses are payable in cash only.
"It is hoped that implementation of these three leveraged products will add to the vibrancy of the country's capital market and enhance its depth", the NCCPL said.
The NCCPL is a significant institution of Pakistan's capital market, which provides centralised clearing and settlement services to all three stocks exchanges in the country. The NCCPL has always strived in the hardest of times and has maintained its optimism to create positive impact on the capital market through development of new products.-PR
Comments
Comments are closed.