KARACHI, April 21: The exasperating issue of COT (carryover trade) mode of financing in the country’s stock exchanges was settled with both the SECP and KSE reaching an agreement on Thursday. Minister of State for Finance Omer Ayub Khan brokered the talks between Chairman SECP Dr Tariq Hassan and Commissioner (Securities Market) Shahid Ghaffar, representing the ‘apex regulator’ (SECP), and the board of directors of Karachi Stock Exchange, representing ‘the frontline regulator’ (KSE).

The announcement that all contentious issues were resolved was made by the Managing Director KSE, Mr Moin Fudda, minutes before the close of trading on Thursday.

Investors greeted the development with relief, hoping the crisis which had gripped the stock market ever since the KSE-100 index hit its life-time high of 10,313 points on March 15 this year would end.

The index rose by 71 points on Thursday and brokers said that much of the rally was in anticipation of a positive outcome of the talks that lasted three hours.

The following conclusions were made on the COT phase-out issue: (1) Freezing date of April 29, 2005, for COT position stood withdrawn pursuant to the request made by the board, management and members of KSE; (2) the extended date for COT phase-out would be August 26, 2005, instead of August 3, 2005, as notified earlier; (3) the weekly reduction of outstanding COT positions would be 8.25 per cent instead of 12.5 per cent w.e.f. June 8, 2005; and (4) revised list of eligible securities for May 2005 futures contracts was to be announced on Thursday evening.

The KSE board is said to have assured the SECP and the government that there would be no further request for COT extension and that COT would not be dependent on margin finance.

All parties, however, agreed to make concerted efforts to promote margin finance.