KARACHI, May 11: A meeting of the board of directors of the Karachi Stock Exchange on Thursday decided to implement the much-awaited KSE-30 index from July 1.
The KSE did not divulge what transpired at the marathon meeting of the board, which was the third since the start of the year when the new board came into existence with a non-member director as its chairman. But sources privy to the meeting said that a tall agenda with about a dozen items was placed before the board.
The important issues included those regarding, KSE-30 index; Unique Identification Number (UIN); cash settled stock futures and matters relating to board meetings of listed companies.
Introduction of the KSE index of 30 shares, to be selected on the basis of free float market capitalisation was a long standing demand of the market. It is still to be ascertained whether it would run along side the current KSE index of 100 shares or replace it, altogether.
The reigning KSE-100 index has been a target of criticism for its lop-sidedness. Slight movement in prices of couple of heavyweight stocks, such as OGDC; PTCL; POL, can set the direction of the entire market due to the composition of 100-index on the basis of market capitalisation. The second index currently in place at the KSE is the All Shares Index though that has been of little significance and scarcely referred to in the market movement.
Another important decision taken at the meeting of the board was regarding the UIN. No date appeared to have been set on its implementation, but the policy decision was said to have been sent to the Securities and Exchange Commission of Pakistan (SECP). Fund managers believe that the introduction of UIN would increase the transparency of the market as each investor will have his orders identified through UIN and it would not be possible to bundle individual orders with those of other clients.
The third important matter was regarding the cash settled stock futures on which the board directed the management to start the process with one company (Pakistan Telecommunication Company Limited). The wider application would be deliberated upon after obtaining results of that test case.
Certain issues pertaining to the meetings of board of directors of listed companies also came up for discussion. Several ideas were floated. Important among those were that trading should not take place in shares of companies on the day of its board meeting.
It was also suggested that the financial results and other details of board meetings should be announced after the close of trading hours. Since opinions were divided, it was decided to study the global practice before taking a decision in the matter.
