The Securities and Exchange Commission of Pakistan (SECP) has approved the amendments to the National Clearing Company Pakistan Limited (NCCPL) Regulations 2015 that were made in the Margin Financing (MF) product. These amendments will allow security brokers to improvise the financing they provide to their customers. The reforms will also help investors who are looking to invest in trading or purchasing shares.
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The Margin Financing facility will also be available to those investors who have to make their net purchases in accordance to the expiry of their contracts eventually helping investors in honoring their settlement obligations and reducing any settlement risks.
Further to this amendment, the broker who will meet the eligibility criteria will be allowed a 75% MF pledge in favor of NCCPL in order to fulfill requirements that were against Ready Market
“The core issue is that the NCCPL was not allowing direct financing by the banking sector, whereas the fact is that the bulk of funds are available with the banks only,” Senior member Pakistan Stockbrokers Association – Munir Khanani, “What we see is that the NPCCL wants to introduce its terms for the banks whereas the banking sector has its own regulator – the State Bank of Pakistan and they have their own system of financial risk mitigation.”
According to Mr Khanani all relevant regulators such as SBP, SECP, NCCPL should sit together to find the solution to MF issue.
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