Karachi Stock Exchange (KSE) has launched Stock Index Futures Contracts on Tradable Sector Indices from January 1st next year in banking, oil and gas sectors. The exchange notified this to members through issuing a notice numbering KSE/N 6207. Four blue-chip scrips, OGDCL, POL, PSO and PPL would constitute tradable benchmark for oil and gas sector while seven stocks including MCB Bank, NBP, UBL, HBL, BAFL, BAHL and ABL would be the benchmark for banking sector contracts. Oil and gas sector’s free float per centage would be 89 per cent against the banking sector’s 82 per cent. KSE said sector index futures would offer opportunities to investors wishing to gain exposure in specific sectors without actually buying each share in that sector. “Such investors can use SIFC on sector indices to take positions in an entire sector which can be purchased and sold easily and inexpensively,” it said. Exchange said SIFC contracts on tradable benchmark indices are agreements to buy or sell a standardised value of tradable sector index.
This allows investors to track performance of a basket of securities in a given benchmark index. Mark-to-market losses are collected and paid daily, with cash settlement at Rs5 per index point movement and concluded on maturity (without delivery requirement). It said Basket Order Window was also being made available in KATS to facilitate efficient hedging mechanism for small investors, high net worth individuals and financial institutions. “The Basket Order window shall allow investors to place multiple market orders in ready market with same time-priority through a single mouse click for all stocks within a tradable sector index. Once an order set is placed, basket window will show execution status for each line item in the basket. Now with reduced lot size of 1, it is more practicable than ever for small investors to gain exposure of leading oil and gas stocks stalling from a cumulative value of Rs5O,OOO by paying 12.5 per cent margin (i.e. minimum Rs6,500). Moreover, basket stocks may be bought in smallest denomination of 1 stock each which can be hedged by selling a similar index futures contract.
