SECP approves measures for seamless flux of capital


ISLAMABAD, May 29 (APP):The MSCI reclassified Pakistan as an
Emerging Market (EM) on June 14, 2016, which was to take effect from
June 1, 2017.
The rebalancing of portfolios by funds tracking MSCI EM Index
and MSCI Frontier Index is expected to result in a significant flux
of capital in the stock market on the eve of June 1,said in
statement issued by SECP here on Monday.
Considering the experiences of other regional markets, which
underwent such reclassification in recent years, the Securities and
Exchange Commission of Pakistan (SECP) as part of its mandate to
ensure orderly and efficiently functioning capital markets has
approved certain measures as proposed by the Pakistan Stock Exchange Limited (PSX), National Clearing Company of Pakistan Limited,
international broker dealers and local market participants for a
seamless transition.
It has been ensured that minimal changes are made to the system while the trade cycle continues smoothly.
Among other matters, a post-close trading session has been
introduced wherein trading will only be allowed at the closing price
determined during the closing session of the market.
This will allow investors to execute trades through market on
close orders.
Additionally, it is expected that certain investors might prefer placing their orders at or near the closing time during the normal trading session so that their orders are filled as near to the official closing price as possible to reduce their tracking error.
Thus in order to cater for the expected high volume during the
closing session, the closing price for all shares shall be determined over the last two hours of the regular market session on the basis of volume weighted average price (VWAP) as against the current practice of last 30 minutes.
This change will only be for a limited period, i.e. from May 26 to June 2, 2017.
The respective indices of PSX shall accordingly be calculated based on the closing prices under the revised arrangement for the said duration and revert to the current practice thereafter.
In order to further facilitate settlement of trades in the market, the State Bank has extended the timings for the real time gross settlement systems until 3:30 pm during the first week of