ISLAMABAD, Aug 20: Prime Minister Shaukat Aziz here on Friday endorsed the decisions taken by the State Bank of Pakistan (SBP) and Securities and Exchange Commission of Pakistan to introduce Continuous Fund Supply (CFS) and amend the Futures Rules Act to improve liquidity of the market and encourage investors, staying away from the market, to build fresh positions.

Official sources told Dawn the prime minister endorsed the decisions of the two regulators at a meeting here with the chairmen of the three stock exchanges and the SECP and State Minister for Finance, Omar Ayub.

The SECP and SBP had taken various decisions at a meeting on Thursday held at the SBP to streamline the procedure hurting the capital market, continuously dragging the index and shrinking the liquidity flow.

The sources said Mr Aziz agreed with a move to allow a credit line for the stockbrokers following the end of Badla system on August 26.

According to the new system, Badla, which was capped at Rs12 billion has been raised under CSF to Rs25 billion to ease pressure on small and retail investors.

The prime minister also agreed to the SECP’s proposal to amend the Futures Act. Instead of 30 days contract, the meeting decided to design new products in the futures market extending the contract to 60, 90 and 120 days.

At present, Badla market opens after completion of regular market dealings. Investors with leveraged positions in the regular market go to the Badla market in search of financing. With the CFS in place, a parallel market for “loanable funds” would work simultaneously and in tandem with the regular market.

Owing to this, the investors would be apprised about the funds availability on real-time basis.

The sources said the small and retail investors would benefit from CFS and would not be at the mercy of big Badla lenders and would be more cognizant of their risk exposures.