KARACHI – Karachi Stock Exchange (KSE) is set to launch much-awaited margin trading system (MTS) from March 7, 2011, that would bolster the trading volume and sentiment of the market, sources told Pakistan Today on Thursday. From Thursday the KSE has started the mock trading of the shares to be traded under the Margin Trading System with the aim to streamline the system ahead of its launching. Sources said that Finance Minister Hafeez Sheikh is scheduled to visit Karachi Stock Exchange on March 5 to inaugurate MTS.
From March 7, 2011, the long-awaited MTS would be enforced, said sources, adding 34 companies’ shares could be declared eligible for the MTS that is being introduced in place of ‘badla’. The upcoming development of MTS launching has improved the sentiment at the stock market and the KSE has started showing recovery and moving towards growth during the past few days, said Ahmed Nabil, chief financial adviser of Pak-Oman Investment.
He said during the initial days of the launching of MTS the stock market could show good growth in trading volume and in value of shares. But this system may not support long-term growth at the market, he said, adding because the market players, who are also the financers of MTS, could manipulate the market like the past to take advantage of the weak-holders. The weak-holders would get into trouble in case the market players manipulated the market when the KSE index would have gained much strength in the wake of the launching of the MTS, he said.
It may be noted that on last Friday the stock market suffered a big blow as the KSE-100 index lost more than 400 points after the PML(N) decision to kick-out the PPP ministers from the Punjab cabinet.
However, the news of the MTS launching has pre-empted further erosion at stock market and encouraged growth. The criteria of selecting companies for the MTS contain trading on 90 percent of all trading days (225 days); average daily volumes above one million shares; free float is more than 35 percent of issued capital or 60 million free float shares; qualified/negative auditors’ report and impact cost less than one percent on order size of Rs 500,000.
More than 30 Securities fulfilled this requirement and are likely to the eligible securities for the MTS. The companies are Lotte Pakistan PTA, TRG Pakistan, Arif Habib Corporation, WorldCall Telecom, Azgard Nine, National Bank of Pakistan, Pakistan Telecommunication Company, DG Khan Cement, Fauji Fertiliser Bin Qasim, Nishat Mills Limited, SilkBank Limited, Bank Al-Falah and Lafarge Pakistan.
In addition, Bank of Punjab, NIB Bank, Oil and Gas Development Company, Byco Petroleum, Nishat (Chunian), Hub Power Company, Engro Corporation, Pak Oilfields, Lucky Cement, Pace Pakistan Ltd, Nishat Power Ltd, MCB Bank, Karachi Electric Supply Corporation, United Bank Ltd, Attock Refinery, Adamjee Insurance, Pak Petroleum, Fatima Fertiliser Company, Fauji Fertiliser and Pakistan State Oil are also among the companies that could be eligible for trading under the MTS.
