SECP amends NCCPL rules

ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has approved amendments to the National Clearing Company Pakistan Limited (NCCPL) Regulations 2015 to introduce reforms in Margin Financing (MF) products, which allows securities brokers to provide financing to their customers in a regulated manner, it said on Saturday.

“These reforms will facilitate investors who wish to undertake leveraged trading and need finance for purchasing shares,” the commission said in a statement.

“As a result of these reforms, position limits and exposure limits have been liberalised to allow more liquidity.”

The regulator said MF facility would now also be available to investors against their net purchases at expiry of Deliverable Futures Contracts period, which would facilitate investors to honour their settlement obligations in futures segment, thereby further reducing settlement risk.

“Further, in consideration of meeting funding needs of investors, MF facility will now be available on T+1 against their net purchases in Ready Market segment,” it added.

Moreover, it said MF Financiers could now collect MTM losses in any manner mutually agreed under the financing agreement signed with the borrower instead of the earlier stipulated mandatory collection of MTM losses in cash only in case of 5 percent decline in MF financed security value.

“Further, the brokers that meeting specified eligibility requirements shall be allowed to pledge 75 percent MF financed securities in favour of NCCPL to fulfil margin requirements against exposure in the Ready Market.” Lastly, MF financiers would be allowed to release an MF transaction and rollover with revised MF transaction value after adjusting MTM losses and any payment received from their investors.