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SECP approves revised list of 60 margin eligible securities

By Tanveer Ahmed

KARACHI: Securities & Exchange Commission of Pakistan (SECP) has approved the revised list of 60 margin eligible securities.

SECP accorded the approval to the proposal of Karachi Stock Exchange (KSE) that was submitted with the apex regulator some time back. The proposal for the revised list of margin eligible securities was part of initiatives for the development of capital markets in the new margining regime.

Earlier, 46 companies were on the list of margin eligible securities and now the list has been enlarged to bring companies in its net in order to make them acceptable as collateral.

Eligible margin securities are those stocks or bonds, which can be used as collateral in a margin account.

Margin requirements against exposure and MTM losses on proprietary accounts of the member will be determined based on the collateral i.e. margin eligible securities pledged through house of the members and/or cash/bank guarantees deposited with the exchange.

However, any excess collateral over and above the margin requirement on proprietary accounts of the member may be authorized to exchange to cover margin shortfall of their clients.

Analysts commenting the revised margin eligible securities said that the step would help raise the volumes in the market because investors would have a much broader universe of securities.

“It will only increase the range of products that would be available in the market to be used as a collateral”, Khurram Schehzad, analyst at Investcap pointed out.

However, he noted that the problem lies with the absence of a proper financing product in the market, which would hamper any initiative to boost the stock market. CFS was banned in April this year and after that work was carried out for a new financing product for the market that culminated in the shape of “margin financing”.

However, this new product could not be launched in the market despite the lapse of so many months that is creating liquidity problem in the market.

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