SECP approves measures for seamless flux of capital

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP), as part of its mandate to ensure orderly and efficiently functioning capital markets, has approved certain measures as proposed by the Pakistan Stock Exchange Limited (PSX), National Clearing Company of Pakistan Limited, international broker dealers and local market participants for a seamless transition of capital, a statement said on Monday.

It has been ensured that minimal changes are made to the system, while the trade cycle continues smoothly, it added.

The MSCI reclassified Pakistan as an Emerging Market (EM) on June 14, 2016, which was to take effect from June 1, 2017, a statement said on Monday.

The rebalancing of portfolios by funds tracking MSCI-EM Index and MSCI Frontier Index is expected to result in a significant flux of capital in the stock market on the eve of June 1, it added.

Among other matters, a post-close trading session has been introduced; wherein, trading will only be allowed at the closing price determined during the closing session of the market. This will allow investors to execute trades through market on close orders.

Additionally, it is expected that certain investors might prefer placing their orders at or near the closing time during the normal trading session so that their orders are filled as near to the official closing price as possible to reduce their tracking error, it said.

Thus, in order to cater to the expected high volume during the closing session, the closing price for all shares would be determined over the last two hours of the regular market session on the basis of volume weighted average price (VWAP) as against the current practice of the last 30 minutes.

This change will only be for a limited period, ie, from May 26 to June 2, 2017, it added.

The respective indices of PSX would accordingly be calculated based on the closing prices under the revised arrangement for the duration and revert to the current practice thereafter.