KARACHI, April 20: A representation signed by 75 members of the Karachi Stock Exchange was sent on Wednesday evening by the KSE MD, to the chairman, Securities and Exchange Commission of Pakistan (SECP) Dr Tariq Hasan, requesting for waiver of the condition of freezing Carry-Over Trade (COT) or ‘badla’ positions as on April 29, 2005.

A statement by members of the KSE, which they handed over to the MD KSE, Mr Moin M.Fudda, states: “The recent agreement of freezing of COT positions on April 29, 2005 by the KSE delegation with the SECP was taken in haste and without analyzing its consequences.” The stock brokers’ representation went on to state: “This condition has created great pressure in the market, resulting in severe bearish trend, since last two days and the investors incurring huge losses and losing confidence in the market.”

The members wrote: “In view of the above, we request the independent management of the exchange to immediately intervene, on behalf of all stakeholders and make representation to the SECP to kindly waive the condition of freezing COT positions as on April 29, 2005, while other conditions remaining unchanged.”

A letter by MD Moin M.Fudda with the copy of the members’ petition was sent to the SECP chairman. The KSE MD observed: “The management wishes to submit to the esteemed commission that though the condition of freezing COT position on April 29, 2005 as contained in the revised structure of COT phase-out (SECP letter dated April 18 and KSE notice of April 19) was agreed and consented by the KSE delegation, authorized by the Board; nevertheless its repercussions on the market were not fully contemplated at that time. The same has been reflected in the members’ representation.”

The KSE management went on to write: “While taking this opportunity, we submit that to-date, 22 scrips have already been phased-out smoothly and efficiently, whereas the remaining seven are blue chip and comparatively have higher turnovers and position in Ready as well as COT markets. Keeping this in view, the Board of Directors requested the Commission to revise the COT phase-out Plan and the same was kindly accepted by the Commission.”

The KSE management letter stated: “However, it has been observed that the condition of freezing COT positions on April 29, 2005 has caused nervousness amongst the market participants, in anticipation of hardship that after April 29, 2005 the financers may not be able to square their COT positions in Ready Market on time. This will lead to selling pressure and may adversely affect the market sentiments.”

The KSE management letter concluded with the following words: “In view of the above submissions and with the prior approval of the Board of Directors of the Exchange through circular resolution, we request the esteemed Commission to kindly waive the condition of freezing COT positions on April 29, 2005, from the revised COT phase-out plan. Nevertheless, all other conditions as given in the revised plan remain the same.”