July 22, 2006	Saturday	Jumadi-ul-Sani 25, 1427

KARACHI, July 21: The State Bank has allowed non-residents to trade in shares in futures market through special convertible rupee account. The decision was announced through a circular issued here on Friday by the State Bank.

“It has now been decided to allow non-residents to trade in shares in futures market through special convertible rupee account (SCRA),” said the SBP circular.

Analysts said it was an important decision that would help the futures market to grow. However, they maintained that the decision was part of the State Bank’s reforms regarding the foreign exchange regime.

The State Bank has been delegating powers to the authorised dealers to use the foreign exchange.

“It is liberalisation of the foreign regime that is an ongoing process and the SBP has been gradually delegating powers to the banks to use foreign exchange in most of the cases. Earlier such transition required permission from the State Bank,” said a head of research at a leading brokerage house.

According to the State Bank procedure, a separate sub-account under the special convertible rupee account (SCRA) would be opened by foreign investors through which an investor would route receipts or payments, initial margin, mark-to-market settlement, transaction charges, commission, fees, etc. Margins relating to futures contracts may also be routed through this account.

However, while allowing refund of the margin through the SCRA to a non-resident, the authorised dealer should ensure that the broker has quoted the date and instrument number under which the margin was received by them.

Authorised dealers will report information on market value of foreign investments through future trading in their weekly returns to the statistics department of the SBP.

The daily statement showing inflow and outflow and opening and closing balances in the SCRA will continue to be reported to the statistics department.