KARACHI, Dec 29: As many as 60 financiers (lenders) and 88 financees (borrowers) had submitted their consent to the National Clearing Company of Pakistan (NCCPL) for participation in the CFS MK-II square up Scheme, by the close of the stipulated time of 12pm on Monday.

Informed sources told Dawn that the aggregate gross amount stuck up in the CFS to be squared-up stood at Rs9.5 billion. The consent received for settlement was for the gross amount of Rs6.5 billion. Non participants, therefore, held around Rs3 billion. Shedding the discount, the net amount consented to be squared-up stood at Rs 4 billion.

The unsettled amount in the CFS (badla)-shares purchased on borrowed money, was thought to be at the heart of the continued slump in stock prices since the removal of the floor on Dec 16.

A committee formed by the Advisor to PM on Finance, Shaukat Tarin, the previous Wednesday, came up with a formula that was accepted by most stakeholders.

The Scheme, participation in which was voluntary, proposed squaring up of all open CFS MK-II transactions at 12.5 per cent discount to the closing stock prices on Dec 24.

“This programme is likely to lead to the maximum repayment of financier funds and prevent mass scale broker defaults,” the NCCPL observed, adding: “The stock market system will become completely de-leveraged.”

The Clearing Company conveyed all CFS MK-II participants a few basic points based on the consultations with the stakeholders. (1) That it was only a one time Scheme; (2) The Implementation of the Scheme was subject to withdrawal of all pending litigation; and (3) The date for payment of amount payable under the final demand notice or final loss notice, as the case may be, under Clause 2(b) of the Financee’s Confirmation of Participation would be Jan 5, 2009. The NCCPL therefore asserted: “Accordingly, the participating Financees shall make the payment under their respective final demand notices or final loss notice, as the case may be, on or before Jan 5, 2009, failing which NCCPL will proceed in accordance with NCC Regulations.”

NCCPL which was recognised to have done its job well, as a precaution absolved itself of all liabilities by stating that the Scheme was being implemented with the consent of the Authorized Financiers and Financees.

“NCCPL is only acting as CFS MK-II Facilitation Agent to facilitate the Implementation of the Scheme without incurring any liability,” the Clearing Company contended that the

programme was designed for the orderly squaring up of the CFS MK-II (CFS) market and the underlying (CFS) shares and associated share in margins so as to minimise losses to the financiers on their CFS financed positions and minimise the final demand notice for financees.

The consent letters were to be submitted by 3pm on Sunday, but the time was extended till noon on Monday.