November 6, 2002	Wednesday	Sha’aban 30,1423

KARACHI, Nov 5: In a series of three separate announcements on Tuesday, the Karachi Stock Exchange stipulated change in prevailing COT (badla) procedures; reduction of weightage of KESC in KSE indices and cautioned investors not to deal with unauthorized investment advisors.

COT: KSE informed the members that in compliance with the decision of the board, the prevailing (Carryover Trade) COT procedures would be changed, by virtue of which from November 11, 2002, all carryover transactions would be for a period of 10 trading days. During the period, financee (borrower) may release COT on any day before completion of 10 days period, whereas financier (lender) would be able to release COT after completion of 10 days period. All COTs from November 11, would be executed under the new procedure for 10 trading days, the Exchange said.

KSE managing director Moin M. Fudda stated in a statement that currently the COT financing was done on daily basis and therefore with the introduction of the new procedure, the potential risk of sudden and massive withdrawal of financing from the market would be relatively mitigated.

Review of criteria of KSE-100 index: In the second announcement, the KSE observed that a committee had been constituted to review the criteria of KSE-100 index. And as an interim measure, it had been decided that the weightage of capital of Karachi Electric Supply Corporation (KESC) be reduced in the KSE indices from 8.800 billion shares to 2.266 billion shares, i.e to the extent of issued capital of the company, prior to conversion of the government’s debt into equity by 6.534 billion shares.

KSE MD Moin M. Fudda explained: “The decision had been taken in consideration of the fact that KESC is a closely held company having relatively a huge market capitalization, resulting in substantial effect on KSE-100 index, even on a nominal change in its share price.” The bourse said the change in KSE indices would be effective from November 6.

Unauthorized investment advisors: The third announcement said that it had come to the knowledge of the KSE that certain unregistered persons and parties were offering unauthorized advisory services. “In its continuous campaign at protecting investors’ interest, the KSE cautions investors not to deal in any way with any unauthorized investment advisors. Any loss caused by soliciting advise or service from such illegal investment adviser(s), would regrettably be due to investors’ own decision,” the bourse said and added that for investment advisory services, investors should consult only such investment advisers, which are registered with the Securities and Exchange Commission of Pakistan (SECP) under the Investment Companies and Investment Advisers Rules, 1971. Any other person or party is ineligible to commence or continue business as investment adviser under Rule 18 of the above Rules.

The stock exchange advised investors to take due caution in seeking and following investment related guidance. “Investors should make informed, intelligent investment decisions, based on company fundamentals,” the bourse said and reminded investors of “Investors Guide” books released in two volumes by the SECP, which contained some useful information and could be accessed at the SECP or KSE websites.