Karachi Stock Exchange (KSE) on Wednesday notified amendments to regulations for short selling under ready market, 2002.
The KSE notified that in addition to existing clauses (a) and (b) of regulation 3, (Short Selling) or the Regulations for Short Selling under Ready Market, 2002 the Board of Directors of the Exchange, with prior approval of the Securities and Exchange Commission of Pakistan (SECP), has agreed to add further two sub-clauses (c) and (d) in the said regulation, which will allow the market participants to execute their Short Sale Orders without any Price Check (Uptick or Zero tick) through Sale Order Window executed through F8-Key subject to terms and conditions mentioned in these new clauses.
However, all Short Sale Orders executed through F8-Key in the Short Sale Eligible Securities, notified by the Exchange from time to time, can be placed based on prior borrowed transactions in the short sold securities through Securities Lending and Borrowing (SLB) system available at NCCPL's portal.
The KSE reproduced the amended regulation 3 of said Regulations for understanding of all concerned. However updated version of the complete Regulations is available on KSE website: www.kse.com.pk
3. SHORT SELLING
(a) Short Sale under Ready Market shall take place through the Karachi Automated Trading System (KATS).
(b) Short Sale will only be permissible on Uptick or Zero-Plus Tick.
(c) Notwithstanding anything mentioned in sub-clause (b) above, Short Sale shall be allowed without Uptick or Zero-Plus Tick up to the following extent:
i. UIN-Wide Position: A U/N will be allowed to make short sale to the maximum extent of 2 percent of Average Daily Turnover of the respective security of previous one month.
ii. Member-Wide Position: A Member for his all UINs including its Clients' Positions will be allowed to make Short Sale to the maximum extent of 4 percent of Average Daily Turnover of the respective security of previous one month.
iii. Market-Wide Position: All Members on cumulative basis will be allowed to make Short Sale to the maximum extent of 40% of Average Daily Turnover of the respective security of previous one month."
(d) Provided that the exemptions mentioned in sub-clause (a) above shall not be available in the following cases:
---- when the price of a security declines up to 2.5 percent from the closing price of the previous day, the exemptions shall not be available for the remainder of the day:
---- when lower circuit breaker, as prescribed and amended from time to time in Regulations Governing Risk Management of the Exchange, becomes applicable on the closing price of a security, the exemptions shall not be available for the next two working days;• when lower circuit breaker, as prescribed and amended from time to time in Regulations Governing Risk Management of the Exchange, becomes applicable on the closing price of a security, consecutively for five working days, the exemptions shall not be available for next 15 working days after the 5th working day.
A mock session will be available for all members on Saturday, February 4, 2012 to test the aforesaid functionality, which will be made available on live system effective from Monday, February 6, 2012 through KATS. A separate notice will be issued for deployment and mock session of said functionality.