KARACHI, June 11: The Chairman, Securities and Exchange Commission of Pakistan (SECP), Khalid A. Mirza expressed his “deep concern” over the financing procedures for Carry Over Transactions (COT) in the equities trade.

A press release issued by the city office of the SECP said that a meeting of the co-ordination committee of the SECP and the three stock exchanges was held on Tuesday at which Mirza said that SECP had, on previous occasion, taken up that matter with the stock exchanges and they had assured of review and removal of deficiencies in their existing systems of COT financing.

“However so far they have failed to make suitable amendments in this regard,” SECP chairman was stated to have said.

The SECP statement said that a series of measure in regard to COT were decided by the co-ordination committee on Tuesday which included: (1) COT should be for a minimum period of ten days and the financer would have the option to release it after one day; (2) COT would only be allowed in liquid shares; (3) Margin against COT financing would be higher than that for normal market trades; (4) COT shares would be kept with the CDC or the Clearing House of the Exchange and would be pledged in the name of the financier in case it is a bank or a financial institution; (5) 50 per cent of the minimum mandatory capital balance would be kept with the management of the Exchange and would be treated as part of the exposure deposit; (6) A system of pre-trade verification would be introduced at the KSE latest by June 30, 2002; (7) It would be mandatory for brokers to obtain margin from their clients and (8) Over-the-Counter (OTC) market regulations would be finalized shortly.