The Securities and Exchange Commission of Pakistan (SECP) has constituted a high-level committee to thoroughly review the Continuous Funding System (CFS) MK-II including risk management, eligible securities and margin requirements. The committee has been entrusted with the task of reviewing the CFS MK-II and its role as a leveraging product to enhance market liquidity.
The committee shall also recommend other leverage products in line with best international practices and will submit its recommendations and report to the SECP. The CFS MK-II Review Committee will be headed by the CEO, Royal Bank of Scotland Limited, Shehzad Naqvi.
Naqvi is a career banker with a vast experience in corporate finance and investment banking. The committee has representatives from the three stock exchanges, National Clearing Company of Pakistan Limited, Mutual Fund Association of Pakistan (MUFAP), Pakistan Banks'' Association (PBA) and senior securities market professionals and stakeholders.
When contacted the official spokesman of the SECP, Imran Ghaznavi told Business Recorder that the CFS Mk-II Market would ensure transparent and efficient financing in the capital market. Further, the CFS Mk-II Market, a paradigm shift from the existing CFS Market, will allow the institutions to directly provide financing in the equity market in the capacity of authorised financiers.
The new financing system will ensure certainty of funding, whereby institutional financiers and authorised brokers will commit a minimum amount of financing for a period of at least 90 days, the official said. The NCCPL would manage the risk management in the CFS Mk-II Market, which had stronger risk management measures in place, as compared to the CFS Market. With the implementation of the CFS Mk-II, the capital markets will enter into a new phase of transparency and small investors and brokers will have easy access to credit, the SECP spokesperson added.