The Karachi Stock Exchange (KSE) members' committee on leverage product met here on Thursday to discuss different proposals for launching of a leverage product to replace CFS Mk-II. Some senior members also attended the meeting. The committee members agreed that the absence of a leverage product is one of the main reasons of prevailing dull trading activity at the share market.
The members stressed for early launch of a leverage product to replace CFS Mk-II to increase the trading activity and to restore investors' confidence. Sources said that at least three products including margin financing, CFS Mk-II and Deliverable Futures were discussed in the meeting. It is learnt that the meeting decided to take suggestions from all the KSE members regarding launch of any leverage product.
Sources said that the meeting finalised some 21 points to discuss with the KSE members for launch of any product. These points would be sent to all KSE members in the next two days and they would be asked to give their suggestions till June 12, 2009 in the light of these points. Regarding the said 21 points, the sources said that the members would be asked to give their suggestions about the new leverage product.
They would also be asked to give their proposals regarding exposure, positions and the rate of financing. It is learnt that the committee suggested that the financing rate should not be more than KIBOR+7. Meanwhile, the meeting of the Consultative Group also held here on Wednesday to discuss the early launch of such product.
The meeting discussed the possible launch of margin financing product to replace CFS Mk-II. In the said meeting it was suggested that the investors would be provided financing facility from banks through members of the exchange. It is learnt that the Consultative Group will finalise its proposals soon and will send to the Securities and Exchange Commission of Pakistan (SECP). It is also learnt that the SECP will sent these proposals to all the stake holders before its approval.