Investors at the Pakistan Stock Exchange (PSX) would have to wait a little longer, as the modified version of margin financing system would be launched by the end of May.
“(The) Securities and Exchange Commission of Pakistan (SECP) had already framed the regulations; (and) now the market’s IT system is being modified accordingly and the new leverage product would definitely come online by (the) end of May,” a senior PSX official said.
“The new leverage product is not an alternate of in-house badla financing and would not expose financiers or the financees to unnecessary risks,” the official added.
The Securities and Exchange Commission of Pakistan (SECP) has now allowed brokerage houses to provide financing to their clients through commercial banks.
The banks would provide financing against deposit of securities/shares, while shares bought through the newly-acquired funding would be kept in a separate blocked account at the Central Depository Company.
With this, the condition of depositing 10% cash against in-house financing has come to an end. In case prices of financed shares go down, the banks would collect the difference from the brokerage house that would, in turn, collect the difference in cash from the client.
The Securities and Exchange Commission of Pakistan (SECP) has now allowed brokerage houses to provide financing to their clients through commercial banks.
The following were the recommendations approved by the SECP in the month of March :