Regulations for Trading Provisionally
WHEREAS the question of trading in the scrips of
companies prior to the official listing by the
Islamabad Stock Exchange (Guarantee) Limited and
more commonly known as “Kerb Trading” has always
been a matter of concern for the Exchange;
AND WHEREAS it is desirable that in order to protect
the interest of the investors, listing is done
simultaneously with the publication of the
prospectuse, which requires regulations to regulate
such trading;
NOW THEREFORE, the Islamabad Stock Exchange
(Guarantee) Limited in exercise of the powers
conferred by sub-section (1) of section (34) of the
Securities and Exchange Ordinance, 1969 (XVII of
1969) makes with the pervious approval of the
Corporate Law Authority, the following Regulations
namely:-
1. SHORT TITLE & COMMENCEMENT
a) These regulations may be called
the “Regulations for Trading in Provisionally
Limited Companies 1996.”
b) These regulations shall come into
force at once and shall substitute the existing
Regulations for Trading in Provisionally Listed
Companies.
2. DEFINITIONS
In these regulations, unless the subject or context
otherwise requires:
a) “Board of Directors” means the
Board of Directors of the Exchange;
b) “Clearing Day” means the clearing
day fixed by the Exchange from time to time;
c) “Exchange” means the Islamabad
Stock Exchange (Guarantee) Limited;
d) “Secretary” means the Secretary
of the Exchange;
e) “General Regulations” means the
General Regulations of the Exchange enforced and as
may be amended from time to time;
f) “Member” means the Member of the
Exchange;
g) “Provisionally Listed Companies”
means the Companies provisionally listed under these
regulation on the Exchange;
3. Business in shares of
provisionally listed companies shall be conducted
under these regulations, which are in addition to
the General Regulations of the Exchange. The Board
of Directors reserve the right to alter the terms
for each scrip as may be deemed necessary.
4. Any company whose listing
application subject to a minimum public offer of 10
million shares of Rs.10 /-each has been approved and
whose prospectus has been cleared by the Exchange
shall be deemed to be provisionally listed for
trading from the date of publication of prospectus.
Further, it shall be deemed to be so provisionally
listed till the day previous to the day of its being
formally listed on the Ready Board.
Provided that in the event of non holding of ballot
for the allotment of the shares of a company which
is provisionally listed, the board may suspend
trading in shares of such a company till the time
the company is formally listed on the Ready Board.
Notwithstanding such suspension of trading, the
transactions executed before such suspension shall
be deemed to be valid and remain binding on the
parties concerned.
5. Trading shall take place in the
Prvisional Listing Section of the market till such
time as the company is formally listed by the
Exchange on the Ready Board.
6. While opening any contract, the
Exchange shall notify the date of opening of such
contract, the market lot for trading and other
relevant details governing such contract.
7. Every member desiring to do
business in shares of provisionally listed
companies, shall notify the Secretary in writing of
such desire and send a cheque for Rs. 25,000/- as
basic deposit for each scrip to be traded as that of
a provisionally listed company. The basic deposit of
Rs. 25,000/- shall entitle a member to do business
of not more than 200,000 shares in one particular
scrip.
8. Member desiring to do business
of more than 200,000 shares in a particular scrip
shall deposit with the Exchange further amounts at
the following scale of deposit:-
i) from 200,100 to 500,000 shares Rs. 3/-
per share
ii) over 500,000
shares Rs. 5/- per
share
9. At the time of opening of each
contract, the Exchange shall determine the maximum
number of shares that can, at close of any business
day, remain outstanding in the scrip in any member’s
account.
10. All deposits for a particular scrip shall
be subject to first lien for payments to be made
against transactions outstanding in the scrip.
11. Payments upto for Rs.2,500,000/- ( Rupees
two million five hundred thousand)
for the purpose of clearing or deposit shall be
accepted by cheques. Members will be required to pay
by pay order for amounts exceeding Rs. 2,500,000/-.
12. The market lot for the purpose of
trading shall be such as may be decided at the
commencement of the contract in the scrip. All
offers/bids made may be accepted for such marketable
lot or multiples therof up to the limit of the
offer/bid. If any such offer/bid is made and is
accepted by any other member, the offer/bidder shall
be bound by such acceptance.
13. In case of manual trading each
member shall enter all transactions in the note book
prescribed by the Exchange and only entries in such
note book shall, in case of a dispute, be declared
to be valid.
14. All contract slips shall be
prepared on the forms prescribed by the Exchange, in
triplicate by the sellers. Of the three copies, all
of which will be signed by both the buyer and the
seller, the first copy shall be handed over to the
buyer, the second copy shall be sent to the exchange
and the third copy shall be retained by the seller.
Only such contract slips as are duly signed and
stamped by both the buyer and the seller, shall be
deemed valid.
15. All transactions entered into on a
particular day shall, before 5:15 p.m. the same day
shall be sent for registration with Exchange by the
seller. The buyer shall sign the seller’s contracts
before 5:00 p.m.
16. Specimen signature of members and
their authorized Clerks, who will sign the
contracts, shall be registered with the Exchange.
Only such contracts as are signed as per registered
specimen signatures, shall be accepted by the
Exchange.
17. Only such contracts shall be
accepted by the Clearing House of the Exchange as
are within the highest and the lowest range of the
day officially published by the Exchange.
18. A buyer or seller shall be allowed
to sign contracts only to the extent of his deposit
with the Exchange. If any contract, duly signed by
both the parties and submitted to the Exchange,
exceeds the limit of the deposit made by either
party to the contract, the name of such member shall
be posted on the Notice Board of the Exchange by
12.00 noon. If payment of excess deposit is not made
within thirty minutes of such posting, the excess
business of such member shall be immediately squared
up by the Exchange in the open market at the risk
and account of the defaulting member.
19. A buyer or seller shall be allowed
to sign contracts only subject to the limit of the
nember of shares fixed by the Board for each
contract. However, any contract duly signed by both
parties and submitted to the Exchange, exceeds the
number of shares fixed by the Board, the business
beyond the prescribed limit shall be immediately
squared up by the Exchange in the open market at the
risk and account of the member concerned without any
reference to such member.
20. There shall be clearing on the
opening day of such contract at the closing rate of
the day. There shall be final clearing in each scrip
at the closing rate of the day previous to the
listing of that scrip on the Ready Board.
21. Except the opening day of such
contract, in case of price fluctuation of Rs. 5/-
from the opening rate on a particular day which is
maintained for a further time of five minutes from
the time thereof or subject to a further price
fluctuation upto Rs.5/-, whichever is earlier,
trading in the said scrip shall be immediately
suspended and shall be resumed only after payments
of clearings are completed.
22. The Exchange shall prepare daily
individual statements of the members in respect of
the outstanding transactions on the basis of the
contract tickets submitted by the membres, however,
every member shall prepare statement of his
transactions in each scrip separately and shall
submit the same to the Clearing House of the
Exchange alongwith the contract tickets duly signed
by both the buying and selling members or their
authorised clerks alongwith payment, if any, upto
12:00 noon. In case any member fails to submit, upto
the prescribed timings, the statements and payments,
his name shall be posted on the notice board of the
Exchange. In case of failure to make payment within
thirty minutes of such posting the outstanding
business of such member shall be squarred up, at his
risk and account, by the Exchange in the open
market. The amount of the losses on this account
shall be paid by the member concerned within one
hour of the demand, failing which the Exchange shall
be empowered to initiate default proceedings as per
Rules and Regulations.
23. A member shall pay such
differences/losses in his account in any one
contract on a daily basis exceeding Rs. 500,000/-.
However, the amount of Rs. 500, 000/- shall be
payable by the members on the day of the final
clearing of the scrip on the Provisional Counter or
earlier as may be fixed by the Board. Provided that
members may be given adjustments of their previous
credit balances, if any, in a particular scrip
against their subsequent clearing dues of that
scrip.
24. In case of price fluctuation of
100% on Rs.50/- whichever is lower, in share of a
provisionally listed company from the first day
closing rate, the trading in that particular company
shall be stopped till such time as the company is
formally listed.
25. Outstanding business of all
transactions done till the day previous to the
company being formally listed on the Ready Board,
shall be transferred to the Ready Clearing House at
the final clearing rate for settlement of the first
delivery day fixed by the Exchange for ready
transactions.
26. In case of default of
delivery/payment by the seller or buyer, only such
portion as has not been delivered/paid for, shall,
at the risk and account of the defaulting member, be
bought from or sold in the open market.
27. In the event of formal listing of
the company being refused by the Exchange, for
whatever reason, all transactions shall stand null
and void. In such eventuality, all deposits and
clearings received by the Exchange shall be refunded
to the respective members.
28. In the event of default of any
member in respect of deposits and clearings, the
member shall be suspended from all further trading
on the Exchange and his assets shall vest in the
Exchange. Default proceedings will, however,
commence on or after the day of listing of the
company on the Ready Board.
29. The Board may, subject to the
procedure as may be prescribed for the purpose,
allow trading in the Provisionally Listed Companies
through the computerised trading system.
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