Stockbrokers demand 15-day closure of bourse

PSX Stockbrokers Association Monday demanded of the government to announce holidays for Pakistan Stock Exchange for such number of days as has been prescribed by Sindh government in its lockdown notice.
The stock market shall forthwith be operational with the lifting of shutdown notice by the Sindh government, the PSX Stockbrokers Association said this in a letter sent to the Advisor to the Prime Minister on Finance Dr Abdul Hafeez Shaikh.
The PSX Stockbrokers Association said that the government of Sindh has imposed complete lockdown in the province due to outbreak of deadly coronavirus. Pakistan Stock Exchange (PSX), majority of stockbrokers and stock market investors, though all over the world but major chunk are in Karachi, it added.
This lockdown by the Sindh government is based on the fact that human life is more important than business transactions. Therefore, in lieu of the complete lockdown in Sindh the operations of PSX will be subject to huge risk, including but not limited to settlement and systemic, apart from human life at stake. "We can enumerate number of reasons for our recommendation, such as commuting of our staff members will be impossible as Sindh government has not included PSX, and its ancillary service providers in the definition of "essential services", the letter said. "We cannot and should not provoke ourselves and our staff members to stand against the directive of Sindh government; if PSX and its ancillary service providers are defined in the essential services, even than stock market investors cannot be defined as such, therefore, stock market investors will not be in a position to honour their commitments as to payments and deliveries," it added.
The transactions occurred during last 2 working days are subject to settlement from March 24, 2020 which will carry a huge risk for the entire fraternity due to the lockdown; the requirements of exposure and margin deposit on next working day is assumed to be huge as stock market might test number of halts before consolidating itself; stockbrokers might not be able to gather these exposure and margins from its client which might result in total chaos and give rise to operational, settlement and systemic risk. Next week is subject to rollover of positions in deliverable future market which will also be at stake. These are a few reasons explaining the practical and operational difficulties in carrying over business as usual in stock market, the letter said.
"Keeping in view the above and outbreak of deadly coronavirus, we request you to consider our proposal as we, at PSX Stockbrokers Association, are of the considered view that the present situation comes under force majeure and it is indeed the need of the hour to extend the holiday of March 23, 2020 for such number of days as has been prescribed by Sindh government in its shutdown notice and stock market shall forthwith be operational with the lifting of shutdown notice by the Sindh government.
Furthermore, transactions in deliverable future market of March 2020 be automatically merged with April 2020 contract to be opened.