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March 4, 2021

NCCPL amends rules to enhance trading capacity

Business

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APP
March 4, 2021

ISLAMABAD: The National Clearing Company of Pakistan Limited (NCCPL) has introduced certain amendments in its regulations to enhance the trading capacity of market participants and improve liquidity.

The amendments were made for discontinuing the 10 percent additional margins being collected from brokers and the 10 percent additional haircuts being applied by NCCPL on margin eligible securities (MES), and revision in slabs of liquidity margins, which would now be applicable only on large exposures of brokers, according to the annual report issued by the Securities and Exchange Commission of Pakistan.

In addition, the security deposit requirements have been reduced.

The pool of eligible collateral against margin requirements has also been increased and methodology for calculating haircuts on PIBs was prescribed for acceptance as MES and GoP Ijarah Sukuk has also been included in the list of MES, the report added.

Further, the eligibility criteria of MTS-eligible securities has been revised for selecting from the top 200 securities instead of 100 securities.

The annual report also revealed that the regulatory framework of Pakistan Merchantile Exchange (PMEX) was scattered in multiple set of regulations and with the introduction of the Futures Market Act, 2016, the Companies Act, 2017, and related developments necessitated a review of regulations of PMEX to align it with the statutes and to compile all regulatory provisions in one set; thereby, removing redundancies and ensuring harmonisation within different regulatory requirements.

Therefore, a single document wherein all the regulations of PMEX have been compiled was introduced as the PMEX Rule Book.

To encourage new issuers to tap the capital market, safeguard the interest of the general public, shift towards the disclosure-based regime, promote the listing of debt securities and make the IPO process more efficient, various amendments have been introduced in the Public Offering Regulations, 2017.

Through these amendments, the eligibility criteria for the listing of companies have been reviewed to enable those issuers to raise funds that have a track record of less than three years and have no profitability during the last two years.

Further, the requirement of audited accounts has been reduced from five years to two years and certain parameters for greenfield projects have been introduced.

An exit offer mechanism has also been introduced for the protection of the interest of investors.

Besides, through these amendments book-runner has been allowed to waive the margin requirement of the institutional investors, including foreign investors and the scope of disclosures in the offering document have been enhanced.

The report also said to increase retail and institutional participation in the capital market by expanding the universe of marginable eligible securities and making government securities a more lucrative form of investment, the Central Depository Company (CDC) after thorough consultation with the commission and NCCPL, effective February 6, 2020, has devised a mechanism for allowing TREC holders and their clients to pledge their government securities as margin against their equity trades.