KARACHI, Dec 12: The board of directors of the Karachi Stock Exchange released a notice for all members, following its meeting on Friday evening, stating: “Members are hereby informed that in pursuance of the SECP directive, the exchange shall remove the floor on the closing price of securities placed on Aug 28.”
The notice went on to say: “And, therefore, from Monday, Dec 15, trading shall take place in the market in the ordinary course with normal trading parameters, including application of standard up-side and down-side five per cent circuit breakers rule in place.”
“That settles to rest any misgivings on the opening of the market on Monday,” commented an analyst.
A senior director told Dawn that given the tight liquidity position, the board had recommended to the SECP that CFS be rolled over for a reasonable period of time, which would facilitate soft landing of the market. A letter to that effect was forwarded to the apex regulator on Friday.
Among the broker community, there was scarcely a resistance to the directive by the SECP issued a day earlier, asking the three stock exchanges to remove the floor from Monday.
The sticking point, nonetheless, was the huge sum of Rs11 billion remaining in the CFS or ‘badla’ (terms used for equity purchases on borrowed money).
Stakeholders were believed to have stood their individual ground in a meeting with the SECP on Friday.
Financiers and financees could not see eye-to-eye on the issue, each attempting desperately to protect their own interests. Several meetings were in progress until late in the evening, as groups of common interests conferred to achieve the best terms for themselves.
There was also talk of some two dozen brokers having signed a petition threatening to move the courts. They were demanding the roll over of the ‘badla’ until the arrival of the stock market support fund. Market makers thought that since the issue of ‘badla’ was left untouched in the SECP directive of Thursday, the top watchdog might clarify the matter in the next two days.
Tired of the market freeze for more than three-and-a-half months, the silver lining was that for all the differences, most brokers, traders and analysts were converging on the view, appropriately articulated by a broker: “Come hell or high water, markets should restart normal functions from Monday (Dec 15).”