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.