KARACHI, Sept 22: The representatives of Karachi Stock Exchange met the Governor of State Bank of Pakistan (SBP), Dr Shamshad Akhtar, on Monday and presented certain proposals, which could help lift the market out of the current unhappy situation.

Sources close to the talks said that the meeting was attended by the chairman of KSE, the managing director of the bourse and at least three top stock brokers.

“In essence, it was an informal discussion in which the KSE people briefed the SBP governor about the affairs at the exchange and asked the central bank to lend a helping hand in putting the bourse back on the rails,” said the source.

Market managers are also known to be engaged in separate talks with the ministry of finance and the Securities and Exchange Commission of Pakistan (SECP).

On August 27, the KSE put a ‘floor’ at its index level of 9,144 points to prevent a further fall, after the country’s main equity market plunged by more than 6,000 points, with some of the leading liquid stocks losing more than half their value in four months between mid-April and August.

As a result, the market has withdrawn in a state of trance with volume at a life-time low at 3.5 million shares traded on Monday.

“No one has ever seen the market remain open full session and just 11 shares gaining value and 21 ending in the red, as is happening today,” said a veteran stock broker, who sat sinking and dozing in a chair in the trading hall, on Monday.

The person in the knowledge of the KSE meeting with SBP on Monday said that the bourse representatives put forward three proposals for the consideration of the governor, Dr Shamshad Akhtar. One, the SBP was urged to release liquidity into the system.

The governor was said to have told the KSE that the central bank was working with banks to draw up a plan to inject liquidity. The details of the plan would be disclosed soon. Second, the bourse proposed that the sponsors of banks, who wish to raise their equity stake, should be accorded permission on a fast track basis.

The sponsors in a few major banks are known to have sought approval to increase their holdings. And finally, the KSE discussed the prudential regulation under which banks had been permitted to invest 20 per cent of equity (capital plus reserves) in the ready market and 10 per cent in the futures market.

“It was proposed to the governor that the quantum of investment out of the approved 30 per cent whether in the ready or the future market should be left to the discretion of each bank,” said the source. The argument perhaps being that the banks were unwilling to invest in future market on anxiety over a further fall in the stock values.

The governor was said to have given a patient hearing to the KSE and assured the visitors that the central bank would consider the matter and get back to them. No time-frame was given.

Another person privy to the meeting said that it was one in the series of frantic efforts being made by the market managers and stock brokers to stem the rot at the market.

Besides talks with major stake-holders; the finance ministry; the SECP and the SBP, big stock brokers were known to be holding ‘iftaar’ parties at their houses, where after breaking the fast, those present have been deliberating on ways and means to break the market deadlock.

“It’s a long haul and everyone will have to chip in the energy and effort to draw the market out of the mire,” said a market participant.