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KARACHI: The stock market on Thursday was a picture of complete chaos and confusion. As nervous investors scrambled to seek an exit, the benchmark KSE-100 index plunged by a massive 517 points.
The reason for the panic was attributed by brokers to a figure quoted in a newspaper (not Dawn) which suggested that in a meeting with the State Bank on Wednesday, the Securities and Exchange Commission of Pakistan (SECP) mentioned “Rs13.4 billion as cash of the clients held by the suspended brokerage KASB Securities Limited (KSL)”.
That sent shivers down the spines as the huge amount had the propensity to pull the entire market down to the pit.
Efforts by brokers and other participants to assuage investors’ fears and calm the market proved futile.
The SECP played its proactive role as its Commissioner for Securities Market Division (SMD) Zafar Abdullah rushed in to hold meetings with the stakeholders.
About the specific amounts related to the KASB Securities, he clarified to Dawn in the evening: “Securities of around Rs161bn are held in custody of KASB Securities under its CDC Participant Umbrella, out of which securities worth around Rs13.6bn belong to retail clients, whereas the amount payable to clients, in terms of cash by KASB Securities was around Rs1.2bn (and not the confused sum of Rs13.4bn).”
Earlier in the day, Abdullah was huddled together with SMD’s executive director, senior officials of the KSE, Central Depository Company of Pakistan Limited (CDC), National Clearing Company of Pakistan Limited (NCCPL) and Pakistan Mercantile Exchange Limited (PMEX) in a meeting to sort out the related issues.
A spokesman for the SECP said all the outstanding trades of the KASB Securities in the ready market segment were successfully settled. Likewise, all the outstanding contracts in the deliverable futures market were closed out in close coordination with the KSL.
It was also noted that the securities of the investors held in the sub-accounts under the KSL’s control were secure and the investors could easily transfer their securities by following the procedures prescribed by the CDC. Accordingly, all requests for transfer of shares by the investors were being facilitated.
“It was also noted that no fresh positions are being allowed at all exchanges, including in the PMEX [Pakistan Mercantile Exchange],” the SECP said. “The majority of open contracts in the PMEX have already been closed out and sufficient margins in cash are available in respect of open contracts.”
It added that the parties in the meeting agreed to extensive and coordinated efforts to facilitate investors and allow swift and timely resolutions of all requests for transfer of shares and payment of cash claims.
“The regulators are in contact with the KSL’s management with the objective of assisting the KSL in resolving the difficulties and emerging successfully from the current situation,” SECP asserted.
Published in Dawn, November 21th, 2014
