ISLAMABAD, Sept 22: The Securities and Exchange Commission of Pakistan (SECP) on Thursday clarified that any speculation regarding an increase in the funding cap beyond Rs25 billion for Continuous Funding System (CFS) was unwarranted.

According to a statement issued by the SECP, CFS had been introduced as an interim measure to be replaced by alternative modes of financing within the next five months. CFS had been capped to prevent over speculation and to allow the development of other internationally recognized modes of financing such as margin financing, for which the SECP had provided the requisite regulatory environment and sought to facilitate the development of the product with the assistance of the State Bank.

The SECP had also constituted a committee to conduct a feasibility study for the introduction of various derivatives and for improving the structure of future contracts.

This committee would submit its initial report in November and the products were expected to be launched as soon as possible.

The statement said that the CFS would be phased out with the development of new products and availability of alternative modes of financing. The situation would be reviewed in February 2006.