The Karachi Stock Exchange may start trading on Friday with a glimmer of hope because its most pressing problem of stuck-up funds in the Continuous Funding System (CFS) MK II moved towards a solution, acceptable to both the financiers and financees.
A committee formed by Adviser to the Prime Minister on Finance Shaukat Tarin on Wednesday and headed by chairman of the Mutual Fund Association of Pakistan Najam Ali entered into a heated debate with all stakeholders, banks, financiers, financees, mutual funds, financial institutions and others.
Sources told Dawn on Thursday that an ‘amicable’ solution was finally found, whereby one half of the amount of Rs7 billion in CFS would be picked up by the financiers and the other half by the government and state-controlled institutions. That would be on a ‘haircut’ (discount) of 12.5 per cent to the value of the stocks prevailing on Dec 24.
The unsettled amount in the CFS stood at Rs9.8 billion, of which Rs2.8 billion was available with the National Clearing Company Pakistan Limited in margin (cash).
Dragging on for too long, the initial unsettled amount of
Rs11 billion in the CFS (badla) had pulled the market by almost 25 per cent in the last seven sessions, while a growing number of financees (brokers) faced the gloomy prospects of ‘defaults’.
Thirty stockbrokers had been handed out the suspension notices on Wednesday by the NCCPL — the managers of CFS. As many as 21 of them were members of the KSE.
The decision on the CFS settlement was reached in a meeting at the residence of SECP Chairman Razi-ur-Rehman Khan on Thursday. The sources said that recommendations of the committee were conveyed to Mr Tarin.
It was learnt that following the sort of a ‘out-of-court’ solution, representatives of both the financiers and financees had agreed to withdraw suits pending in courts.
There were also reports that efforts were being made to arrange finances to save membership cards of the ‘suspended’ brokers. The CFS finance was one issue. The brokers would have to settle the mark-to-market differences of the past few days and other obligations, before staving off the fear of ‘default’.(Dawn)
A committee formed by Adviser to the Prime Minister on Finance Shaukat Tarin on Wednesday and headed by chairman of the Mutual Fund Association of Pakistan Najam Ali entered into a heated debate with all stakeholders, banks, financiers, financees, mutual funds, financial institutions and others.
Sources told Dawn on Thursday that an ‘amicable’ solution was finally found, whereby one half of the amount of Rs7 billion in CFS would be picked up by the financiers and the other half by the government and state-controlled institutions. That would be on a ‘haircut’ (discount) of 12.5 per cent to the value of the stocks prevailing on Dec 24.
The unsettled amount in the CFS stood at Rs9.8 billion, of which Rs2.8 billion was available with the National Clearing Company Pakistan Limited in margin (cash).
Dragging on for too long, the initial unsettled amount of
Rs11 billion in the CFS (badla) had pulled the market by almost 25 per cent in the last seven sessions, while a growing number of financees (brokers) faced the gloomy prospects of ‘defaults’.
Thirty stockbrokers had been handed out the suspension notices on Wednesday by the NCCPL — the managers of CFS. As many as 21 of them were members of the KSE.
The decision on the CFS settlement was reached in a meeting at the residence of SECP Chairman Razi-ur-Rehman Khan on Thursday. The sources said that recommendations of the committee were conveyed to Mr Tarin.
It was learnt that following the sort of a ‘out-of-court’ solution, representatives of both the financiers and financees had agreed to withdraw suits pending in courts.
There were also reports that efforts were being made to arrange finances to save membership cards of the ‘suspended’ brokers. The CFS finance was one issue. The brokers would have to settle the mark-to-market differences of the past few days and other obligations, before staving off the fear of ‘default’.(Dawn)
Comments