KARACHI, Jan 29: The Karachi Stock Exchange has imposed fine on a brokerage firm for contravention of the "Regulations for Short Selling under Ready Market, 2002" by two of its clients.

The hearing took place before the Managing Director KSE, Moin M.Fudda, following a letter received by the Exchange from National Clearing Company of Pakistan Limited on January 7, regarding delivery default by Live Securities in the shares of Nishat Mills Limited.

The default involved a substantial number of shares, i.e. 256,800, which prompted KSE to carry out a scrutiny into the matter.

The KSE order stated that by analysing the data provided to the Exchange by the brokerage firm, it was established that (a) Crescent Standard Investment Bank, a client of Live Securities had sold 300,000 shares and according to the records provided by the brokerage house, had defaulted on its delivery; (b) A client "Tashif Hussain" sold 200,000 shares on December 31, 2004.

The same client bought a total of 50,000 shares later the same day and at the end of the day had a net sale position of 150,000 shares. "The relevant records submitted with the bourse do not substantiate his pre-existing interest" and (c) A client "Amin & Abdul Aziz" sold 100,000 shares during the trading day on December 31, 2004. "The records submitted by the member with the Exchange do not substantiate his pre-existing interest".

The KSE order signed by Mr Fudda gives the detailed proceedings of the first and second hearings that took place, respectively on January 11 and 26 and concludes: "As mentioned above the contravention of the Regulations for Short Selling under Ready Market, 2002 has been accepted and admitted by the representatives of the brokerage house during the hearings and in exercise of powers conferred upon me, by the Board of Directors, order as under (is passed):

(1) In case of blank sale of 250,000 shares of Nishat Mills Limited by client "Crescent Standard Investment Bank",

a fine of Rs193,650 (calculated @ 1 per cent of the value of blank sale of 250,000 shares of NML @ Rs77.46 per share)is imposed in accordance with Regulation No.11 of the Regulations governing Short Sale under Ready Market 2002; and

(2) In case of blank sale of 100,000 shares of NML by the client "Amin & Abdul Aziz" a fine of Rs77,460 (calculated @ 1 per cent of the value of blank sale of 100,000 shares of NML @ Rs77.46 per share) is imposed in accordance with Regulation No.11 of the Regulations governing Short Sale under Ready Market 2002.