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New future contracts system likely next month

Staff Report

KARACHI: With the phase out of Continuous Funding System (CFS) from the stock market, the board of directors of Karachi Stock Exchange (KSE) is set to meet next week to consider the new leverage product as well as the commencement of future contracts system in the market.

“Board of Directors will meet on July, 14 and most probably would give their nod to a new financing product to replace the CFS,” a director of board told Daily Times on Saturday.

KSE Director said that as CFS has almost been phased out from the stock market, the investors faced difficulties to arrange financing for shares trading. However, in-house financing mechanism is catering to needs of the brokers and investors to some extent.

It is worth-mentioning that Securities & Exchange Commission of Pakistan (SECP) banned the CFS as well as the future contracts earlier in the year. Although, the new leverage product is not finalized, the consensus on “Margin Financing” is almost reached among the stock brokers and during the next board meeting, Securities & Exchange Commission of Pakistan (SECP) would be asked to announce the new financing products as early as possible to overcome the liquidity problem in the market.

About the future contracts system, stock brokers fraternity hoped that it would commence from August and felt that it would not be the same that was abolished by apex regulator along with CFS. “After taking the approval from board of directors, the decision of the board would be forwarded to SECP that is hopefully give the approval to the proposal of KSE’, a director said.

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