KARACHI: Karachi Stock Exchange (KSE) has decided to introduce a new Negotiated Deal Reporting System (NDRS) for equity and debt market segments, which aims to account for greater transparency and allows reporting all off-market transactions in real time.
According to a notice issued by the KSE, currently all off-market transactions are reported via the special interface provided to members on their NCHS terminal. Members are obliged to report the exchange all off-market transactions before 5:00 p.m. or in case the deal takes place aftermarket hours, they are reported next day before 5:00 p.m. The same gets disseminated to the market on the following day, via daily quotations, with quantity, price and members code.
Information regarding these deals is often price sensitive and therefore can be classified as material information which must be shared with all participants of the market in a timely manner. Therefore it is thought that reporting of these transactions be made on real time basis. This will facilitate reporting of trades between investment houses involving large quantity i.e. block trades transactions like mergers, acquisition deals and all off-market transactions in the debt market.
The NDRS, planned to come in effect from November 1, shall remain operative daily and will follow timings of exchange trading i.e. 9:15 a.m. to 5:00 p.m. The responsibility of completing the transaction reported on the NDRS rests entirely on transacting parties. This system should also cater to deals agreed on the telephone and members can place a client-to-client or member-to-member transaction. NDRS shall be an “off exchange” electronic trading facility that will cater to real-time completed off-market transactions indicating the transactions’ volume, price and respective members’ code.
It does not provide automated trade executions and settlement of trades, which remain entirely on counter-party risk. All charges and taxes payable pertaining to off-market transactions presently applicable shall remain in place, like wise. To ensure smooth implementation of the new system, the existing reporting interface on members’ NCHS terminals shall remain operative in parallel with the new NDRS for a further 15 days from November 01, 2010. Thereafter, all off-market transaction shall be reported to the Exchange via NDRS of the Exchange.