Recommendations to be finalised tomorrow

KARACHI: An independent committee, formed by the Securities and Exchange Commission of Pakistan (SECP), will finalise recommendations about amendments to the Securities (Margin Financing, Lending, Borrowing and Pledging) Rules 2010 on Friday.

According to an official press release issued by the SECP, margin trading will be introduced at local bourses through its incorporation into the Securities Rules of 2010.

The concept of margin trading, which was once endorsed by the Karachi Stock Exchange board of directors, will be incorporated into the law after the recommendations of the independent committee are received in the forthcoming session.

The inclusion of margin trading will augment equity-based financing - another feature of the new draft of securities rules.

The official statement highlighted that “the concept of margin trading was once endorsed by the KSE board of directors and National Clearing Company of Pakistan.”

Experts said that the statement implies that all stakeholders in the independent committee have reached an agreement on broader modalities.

The SECP stated that recommendations on the “derivatives segments” will be finalised on Friday. Sources privy to discussions of the committee confirmed to The Express Tribune that broad-based agreements have been reached and technical aspects of new products are now being hammered out.

Analysts said that the announcement helped encourage investors to make fresh buying at the bourse. One prominent KSE member commented “the introduction of products that investors can understand and that are readily available can provide sustained support in the market.”

The committee was formed on June 22 after Federal Finance Minister Hafeez Shaikh met with KSE officials and representatives of stock brokers.

Its members include Managing Director KSE Adnan Afridi, Chairman Mutual Funds Association of Pakistan Habibur Rahman, Chairman Pakistan Banks Association Shehzad Dada, Dawood Jan Mohammad, Arif Habib, Farhan Malik and Musarrat Jabeen from the SECP. After the committee submits its proposals, they will be reviewed by the SECP. Later, the proposals will be forwarded to the federal finance ministry for final approval and implementation.

Published in The Express Tribune, July 15^th, 2010.