February 28, 2007	Wednesday	Safar 10, 1428

KARACHI, Feb 27: The Karachi Stock Exchange sea-sawed the whole trading session on Tuesday as rumours of extension in elimination of client-level netting (CLN) did the rounds, fortified by a footage run by an electronic news channel.

KSE Managing Director M.A. Lodhi was at his wits end answering phone calls, denying that any decision to that effect was in offing. “We are fully prepared to implement the elimination of CLN on March 5 as per schedule,” Mr Lodhi said and debunked the whispers of extension of the date.

Chairman Securities and Exchange Commission (SECP) could not be reached to learn the facts but a member director said that to the “best of his knowledge”, no decision of an extension had been made.

Under the Risk Management Systems (RMS) now under implementation at the bourses, the CLN system is to go into effect on the T+3 (ready market) from March 5 and on contracts for futures deliverable market from April 1.An emergent meeting of the board of directors of the KSE was held in the afternoon on Tuesday, where the CLN was not on the agenda. The sole item related to the fate of “Bonus/Right credited in CFS blocked accounts”.

The board decision conveyed in the evening, stipulated that deliberations were held in the matter of past manual practice of roll-over in CFS to handle the entitlement of bonus/right declared by listed companies and credited in CFS blocked accounts of the CFS financiers.

The announcement by the KSE board at the end of the meeting also said: “The board having observed no inherent risk and flaw in the said system and further in order to avoid chances of re-emergence of in-house badla on discontinuation of the same, decided to continue the said manual practice of exchanging/entering contract tickets by financiers and financees in vogue at the bourse for the last many years”.

The board further decided to make efforts to evolve an appropriate electronic system to replace the manual one in consultation with CDC and NCCPL, directors notified to the members.

A senior member said that the decision by the board was positive for the market; for it removed an uncertainty about the bonus/right credited in CFS blocked accounts.

Under the proposed new system, which has been deferred for the time being, the brokers would have been constrained to ‘force release’ the bonus/right shares in the CFS account instead of the current practice of allowing roll over.