Uptick rule for futures trading introduced
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ISLAMABAD: After a lengthy meeting with the market players, the Securities and Exchange Commission of Pakistan (SECP) on Wednesday decided to implement an ‘uptick’ rule at key trades in futures market from April 1.
The decision was taken in the wake of COVID-19 and its effect on local stock market in a videoconferencing call with stockbrokers along with officials of PSX and NCCPL sitting in the SECP Karachi office whereas the SECP chairman and relevant commissioners in the headoffice.
“The uptick rule means that the shares of that relevant scrip has to be sold at price higher than the last trade and not lower than the last trade,” said a senior official of SECP.
The rules will apply for short sale in 36 specific shares of the futures market.
The SECP has said that the move will help protect market downfall.
Earlier, a number of facilitation measures have been undertaken by the SECP including collection of market-wide concentration margins at specified threshold to rationalise mode of implementation.
Whereas the PSX will adjust its trading system accordingly.
While to support the mutual fund industry, the maximum period of borrowing by mutual funds for redemption purposes will be extended from existing 90 days to 360 days.
Commission has also allowed to relaxations in deposit requirements against base minimum capital of TREC holders.
The requirement to perform biometric verification at the time of opening of account is eased and the biometric verification may be performed within 90 days.
However, other KYC requirements as per the CKO and NCCPL Regulations including VERISYS shall remain applicable.
Over the last couple of weeks, the SECP has been maintaining close coordination with the stock exchange, clearing and depository companies and other market participants and has held multiple sessions.
The other measures are acceptance of near-cash instruments collected market collateral against exposure by NCCPL, inclusion of close-out mechanism in DFC market etc under the new stockbrokers regime.
Published in Dawn, March 19th, 2020
