KARACHI, Oct 12: With the stock market sinking deeper into the mire, a marathon meeting between the apex regulator Securities & Exchange Commission of Pakistan (SECP) and the Karachi Stock Exchange (KSE) ended on Sunday evening with the directors divided right through the centre on solutions to a growing number of problems that plague the market.

All that led to the inevitable decision to keep the market open on Monday. Neither the SECP nor the KSE issued a statement to dispel the anxiety of the investing public. But information gathered from sources familiar with the matter suggested that the proposal forwarded to Adviser to Prime Minister on Finance Shaukat Tareen to close down the market for two weeks was summarily dismissed by him.

Mr Tareen is in Washington to attend the World Bank and the International Monetary Fund meeting, and also to hunt for funds for the country faced with economic woes and depleting dollar reserves.

A director, who asked not to be named, said that Mr Tareen had expressed displeasure over the fixation of float under the stock market fall of 9,144 points by the KSE but later agreed for the planks to remain in place until Oct 7. He did not, however, agree to the closure of the market.

The problem for the stock market were exacerbated on Friday as the continuous funding system (CFS) for badla market ‘that lends money for stock investing’ went dry of liquidity as the financiers declined to release fresh funds into the system. Mr Adnan Afridi, Managing Director of the KSE, said that the meeting with the SECP would continue on Monday.

Stockbrokers were said to be asking for a freeze under CFS rate at 24 per cent as long as liquidity remained unavailable in the system. In case that was not possible the brokers demanded closure of the market till the floor was removed possibly on Oct 27. But SECP Chairman Razi-ur-Rehman had argued that closure of the market would send a wrong signal to the foreign investors who were already demanding free movement. The foreign investors were still believed to holding shares worth $1.5 billion and the great scare was that as soon as the floor is removed, flurry of sale orders would ground the market.

The stockbrokers have called a general body meeting of the 200 strong broker fraternity on Monday to decide how best to tackle the situation that may arrive with the reopening of the market without the provision of liquidity of Rs20 billion to the stabilisation fund. Most analysts expected the meeting to turn rowdy as brokers fear mass default, arising out of the increasing orders on the sell-side; no liquidity in either the ready or the CFS market and the badla rate that had risen to a bridge of 65 per cent and in some scrips as high as 100 per cent.

Analysts admitted that the stock market was in a deadlock which may only ease if the delegation led by Mr Shaukat Tareen returned with funds that could be released not only into the stock market but the whole financial system.