The Karachi Stock Exchange (KSE) is likely to send some proposals to the Securities and Exchange Commission of Pakistan (SECP) soon to relax some of the rules pertaining to futures market, which would help in reviving the confidence of the stock-brokers and convince the financial institutions and retail investors to re-enter the market. According to knowledgeable sources, several rules would be discussed soon to help in providing relief to some of the stock-brokers, who suffered substantial losses during the recent bearish spell.
One of the proposals likely to be forwarded by the KSE would be an increase in the member's exposure in futures contract, from the present one percent to 5 percent of the free-float. Last week, the SECP sent a set of regulations to the KSE, asking the members to take exposure not exceeding one percent of the free-float.
The stock-brokers were of the view that after taking position in free-float, ie, one percent, it is difficult to do any more business in that particular stock. Moreover, from June onwards the brokers have to execute business on cash business, which would also badly hurt the cash flow of stock-brokers.
The brokers are also likely to urge the stock market regulator to amend the condition pertaining to deposit of 30 percent margin for futures contract. They might suggest the SECP to set new rules, allowing the brokers to place deals in futures contract on 50 percent cash and 50 percent securities basis, as was done previously.
Moreover, they would also recommend amending rules for exposures in mark-to-market basis.
It is likely that the KSE would send proposals to the SECP in a day or two, the sources added.