The Karachi Stock Exchange (Guarantee) Limited’s key decision taken by the board of directors during the year 2011 in the interest of securities market and its participants

Karachi: As the members of Karachi Stock Exchange (KSE) are aware, the market has depicted lackluster performance for some time in view of a number of unfavorable local conditions coupled with the recent global financial crisis and as a result, volumes have dwindled over the years and liquidity has remained at bay.

Because of this, a large segment of brokerage houses at KSE is facing severe financial difficulties.

The present Board of Directors of KSE realizes the grave situation confronting the market participants. During the current calendar year, the Board considered various proposals and accordingly, took some critical decisions with a view to alleviate problems of the members of the Exchange, allowing them relief in meeting their monetary obligations.

A brief summary of such decisions is provided below for the information of Members.

1. In order to ensure additional tier of security for Members ‘Trading Terminals, the RSA Token Project was implemented without any extra charges. The earlier decision of charging Rs. 8,000/- per annum per terminal was differed.
Board Meeting No. 02 of 2011 held on February 25, 2011]

2. Payment of profit / mark-up return was allowed to members on their cash margins deposited against exposure. MtM losses and other margins in All Markets as allowed previously in Deliverable Futures Market only.
Board Meeting No. 03 of 2011 held on April 06, 2011]

4. Annual recurring charges with respect to IT facilities and equipment were rationalized, whereby KATS charges collected on yearly basis in advance will be refunded up to 50%, if the members were allowed not to pay one-time charges for reactivation of KATS Terminal, where such reactivation is made within 2 years of deactivation.
Board Meeting No. 03 of 2011 held on April 06, 2011]

5. Basic deposit of Rs. 150,000/- to participate in BATS Market was waived.
Board Meeting No. 03 of 2011 held on April 06, 2011]

6. Parking of one car to each member was allowed free of charges.
Board Meeting No. 03 of 2011 held on April 06, 2011]

7. Basic deposit required for Deliverable Futures Contract Market was waived.
Board Meeting No. 05 of 2011 held on May 31, 2011]

8. Exposure Margins in Deliverable Futures Market was allowed in the form of 50% each in cash/bank guarantee and margin eligible securities, as against 100% in cash.
Board Meeting No. 05 of 2011 held on May 31, 2011]

9. Acceptance of Bank Guarantee on behalf of the members from any bank which meets the minimum credit rating of ‘A’ or equivalent and other criteria as specified in the Regulations was allowed.
Board Meeting held on July 14, 20 and 29, 2011]

10. Authorization to open Investors Portfolio Services (IPS) Accounts with Banks for maintaining –Bills, to be acceptable as Margin Eligible Securities, Board Meeting held on July 14, 20 and 29, 2011]

11. Enhancement of limit from Rs. 25 million to Rs. 75 million, for utilization from Investors Protection Fund in case of default or expulsion post 2008 crisis, subject to SECP’s approval.
Board Meeting held on July 14, 20 and 29, 2011]

12. Allowing individual shareholders (including employees and Executives Director) of Corporate Brokerage House, for the purpose of authorizing utilization of their own securities to meet margin requirements of other UINs.

13. Acceptance of T-Bills as collateral by the Exchange with 2.5% haricut on daily valuation.
Board Meeting held on September 08, 2011]

14. Charging electricity cost to members at existing lower rates till December 2011.
Board Meeting held on September 08, 2011]

15. In-principal approval to the Concept Paper for creation of Small and Medium Enterprises (SME) board at KSE.
Board Meeting held on November 29, 2011]

16. In-principal approval for development of trading platform and system for government securities (T-Bills and PIBs) through KSE.
Board Meeting held on November 29, 2011]

17. Marking representation to FBR for the appropriate treatment of tax on securities transaction and the income/profit being earned by the financier under Margin Financing, Margin Trading and Securitas Lending and Borrowing was agreed by the Board.
Board Meeting held on November 29, 2011]

18. Establishment of a Helpdesk for assisting and immediate responding to queries of members/ investors.
Board Meeting held on November 29, 2011]

19. Allowing more than one bank to brokerage houses for settlement by NCCPL.
Board Meeting held on November 29, 2011]

20. Development of Automated Cash Margin Management System, enabling the broker to process cash collateral deposit and release requests through their NCHS terminals.
Board Meeting held on November 29, 2011]

21. The revised procedure for ‘Senior Member Award’ was approved, whereby members of the Exchange will be considered as individual and their seniority will be taken into account from the day of their association with the Exchange, despite the fact if their individual membership was converted subsequently to Corporate or they shifted to another Brokerage House, by maintaining the continuity without any break through their representation as Nominee Director.
Board Meeting held on December 27, 2011]

22. Recommending to NCCPL to consider providing waiver or relaxation of UIN Registration Fee for those employees of Brokerage Houses, who do not opt for trading, by simply registering those inactive employees into their database.
Board Meeting held on December 27, 2011]

For more information, contact:
Karachi Stock Exchange
Tel: (92-21) 111-001122
Fax: (92-21) 3241 0825, (92-21) 3241 5136
Email: info@kse.com.pk
Web: www.kse.com.pk

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