KARACHI (November 03 2006): The Securities and Exchange Commission of Pakistan (SECP) has allowed the broker CFS financier to pledge CFS-financed securities with the stock exchange as deposit against exposure. In a notification issued here on Thursday, the SECP said that such pledging will only be allowed in the case of proprietary CFS financing by the broker.
Consequently, from November 6, 2006, CFS financed securities which are lying in a separate blocked CFS account in the name of the said broker CFS financier may be pledged with the stock exchanges in settlement of the brokers' exposure commitment.
This facility has been allowed keeping in view the fact that such CFS financed securities held in the blocked CDC account are owned by the broker CFS financier till such time that CFS financing is released at the option of the financee.
The SECP in reference to the meeting held on October 30, 2006 between the KSE members and SECP officials wherein the regulator was requested to allow the pledging of CFS financed securities with the exchange as deposit against exposure. The SECP deliberated the matter in detail and agreed to the request made by the KSE members. The SECP asked the KSE to make the necessary changes in this regard in the exchanges system and regulations.