KARACHI: The Securities and Exchange Commission of Pakistan on Friday lifted the ban on foreign investors to trade in the PSX stock. The regulator also approved the addition of 28 securities in the Margin Trading System (MTS) and Deliverable Future under category ‘B’.

Market watchers reckoned that the first measure would provide a level playing field to all participants and the second aims at assisting the exchange which at the moment is starved of liquidity.

Exercising its powers, the regulator made amendments to the Stock Exchange (Corporatisation, Demutualisation and Integration) Regulations 2012 by virtue of which “foreign persons, other than foreign anchor investor, shall not collectively whether directly or indirectly acquire or hold more than 10pc of the total issued share capital of the exchange”.

The amendment released on Friday further states: “Provided that the commission may, if it deems fit in the interest of the capital market increase the limit of shareholding for foreign persons, other than foreign anchor investor, to 20pc of the total issued capital of the exchange”.

The exchange had placed those two recommendations before the Acting chairman SECP Zafar Abdullah on his visit to the bourse on Nov 23.

Arif Habib, a former chairman of the exchange, expressed his appreciation for the SCP chief who had promised to look into those demands, found them genuine and fulfilled his commitment. He said that by addition of more eligible securities, the second-tier stocks would also be able to secure financing of shares.

Muhammad Lukman, CEO National Clearing Company of Pakistan Ltd (NCCPL), confirmed to Dawn that they were in receipt of the chief regulator’s approval for addition of scrips (category B) eligible for MTS.

He said that the securities were being scrutinised to include in category B and the exact number was yet to be worked out. Mr Lukman said that compared to the 28 securities in the category A, the criteria for the upcoming securities in MTS was kept a bit lenient to offer them cushion. He asserted that concurrently the risk management margins for fresh entrants to the MTS had also been strengthened.

In a notice released on Friday, the NCCPL which provides clearing and settlement services to PSX observed that the task force formed to recommend measures to enhance market liquidity had proposed that the NCCPL management “should look into the eligibility criteria of MTS as the existing criteria results in selection of less than 50 securities out of over 500 securities, which may hinder liquidity of the market”. Accordingly, NCCPL had reviewed the MTS criteria and has proposed introduction of category B securities acceptable as collateral.

Securities on the new category are thought to start on futures counter from February next year.

Published in Dawn, December 23rd, 2017