KARACHI, May 20: The 132 points plunge in stock index — the heaviest fall post-Kargil — sent the board of Karachi Stock Exchange scurrying to put floor under a further fall.
As a first measure, the ‘circuit breaker’ was tightened for falling prices and at the conclusion of a late night emergency meeting, the board decided in favour of keeping market open on Tuesday.
The board also came up with a series of measures — mainly in respect of the ‘badla’ transactions — which it said had been taken in “cognizance of the market conditions”. The average ‘badla’ rate, during the day, had spiralled to as high as 84.75 per cent per annum, from the recent lows of 12-13 per cent.
The first of the two circulars issued by the board early in the day was in respect of the ‘circuit breakers’. It stated that “in view of the existing market conditions and to strengthen the risk management measures” it was decided that the existing circuit breakers, i.e, 7.5 per cent or Rs1.50 whichever is higher from the last closing price on daily basis be changed to 5 per cent or Re 1/-, whichever is higher in case of downward price fluctuation in all markets w.e.f. May 21, 2002. However, the circuit breakers of 7.5 per cent or Rs1.50 whichever is higher would continue for the purpose of upward price fluctuations.
A second notice issued by the exchange at around 10:45 p.m. stated that the board expressed its satisfaction over the same day recovery system of exposure deposits from all members introduced to further strengthen risk management and had decided to adopt the following measures: (1) The management of the Exchange had been asked to submit a report on short sales by the members who had been found involved and also forward a copy of the report to the SECP for their necessary action; (2) Considering the COT rates being exorbitantly high today, the board decided to forcefully release all COT transactions. There would be a separate COT sessions on Tuesday and the KATS/COT timings for Tuesday would be: COT session: 9:30 to 10:30 a.m; Pre-open regular market: 10:30 to 10:35 a.m. and Open regular market: 10:35 a.m. to 2:30 p.m; (3) The board fixed the maximum COT premium rate at 24 per cent and the minimum rate at 10 per cent per annum for a period of one month. The excess amount of premium offered by the bidders would be withheld by the Exchange and would stand forfeited from tomorrow (Tuesday), May 21, 2002, until further orders; (4) The management had been authorized to arrange roll- over of COT transactions of those members who were unable to get their trades carried-over after the COT session tomorrow (Tuesday) which would be distributed proportionately amongst all the financing participants.
This arrangement would be for a maximum period of 10 working days during which period the amount would be adjusted at 10 per cent on daily basis. However, those members who are unable to get their trades carried-over and enhance their outstanding purchases would have to pay additional exposure deposits at the rate of 50 per cent on their additional purchases.
REUTERS ADDS FROM MUMBAI: The key Indian share index closed at a near five-month low on Monday as rising border tensions scared away investors, who are worried about the government’s response to a deadly attack on an army camp last week.
