REGULATIONS GOVERNING FUTURES CONTRACTS OF THE ISLAMABAD STOCK
EXCHANGE (GUARANTEE) LIMITED
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REGULATIONS GOVERNING FUTURES CONTRACTS OF THE
ISLAMABAD STOCK EXCHANGE (GUARANTEE) LIMITED
In terms
of Section 34(1) of the Securities & Exchange Ordinance, 1969, the
Islamabad Stock Exchange (Guarantee) Limited may, subject to the
prior approval of the Commission make Regulations consistent with
the rules to carry out the purposes of Securities & Exchange
Ordinance, 1969. The Islamabad Stock Exchange (Guarantee) Limited
has framed the Rules & Regulations Governing the Futures Contract
which shall come into force on the publication of this
notification in the official gazette of Pakistan.
1. a) Futures Contract in shares on the Future
Contract Market of the Exchange
shall be
conducted under the following Rules & Regulations of the Exchange
with such modifications, alternations and additions as may be made
from time to time by the Board of Directors of Islamabad Stock
Exchange with prior approval of Securities and Exchange Commission
of Pakistan.
b) Trading in Futures Contracts shall take place
through the Islamabad Stock Exchange Computerized Trading System
(ISE-ETS).
c) There shall be separate Clearing House Section
and exposure deposits for the Futures market. The clearing House
shall have the right to adjust any surplus lying in cash counter
section of the brokers to offset any shortfalls in the Futures’
counter section and vice versa.
2. Any Member of the Exchange can enter into
Futures Contracts under the said Regulations if he notifies to the
Exchange in writing of such desire and deposits Rs. 50,000/- as
basic deposit for trading in the Futures Contracts market. This
deposit any along with any return earned on it is to be kept
separate and can not be used for purposes other than by the
Clearing House to meet any obligations of the Member(s) in the
Futures market.
3. a) Deposit against exposures as prescribed in
the Regulations Governing
Members’
Exposure shall be paid in advance in cash and approved
Securities as defined below:-
“Approved
securities” means Government securities such as T-bills, FIBs,
Dollar bonds etc with zero margin; and/or securities which are
eligible for trading under these Regulations with 20% margin;
and/or CDC based listed Term Finance Certificates (TFCs) not below
the ranking of (BBB) graded by a credit rating company with 10%
margin. However, such deposit will comprise at-least 50% in cash
and balance in securities defined herein before. In case where the
exposure is due to sale of shares of a particular company, the
shares of that company upto the extent of net sale can be
deposited as exposure against 50% cash deposit. However, the
deposit against exposure upto Rs.10 million may be accepted in
“Approved Securities” which will be defined from time to time.
b) No Member shall be allowed to have a sale
position in a particular scrip of more than Rs.10 million unless
the actual shares sold over and above the aforesaid limit are
deposited with the Exchange or the broker gives documentary
evidence that the shares are lying in CDC or with some Bank or DFI
to the satisfaction of the ISE Management.
c) Deposits against Members exposure would be
payable as under:
Exposure Limits
|
Deposit payable
|
Upto Rs.20 million
|
7.5% of
the exposure amount |
Over
Rs.20 million and upto Rs.50 million |
Rs.1.5
million + 10% of the amount exceeding Rs.20 million. |
Over
Rs.50 million |
Rs. 4.5
million + 20% of the amount exceeding Rs.50 million |
|
Initial
Margin/Deposit payable must be taken in advance. The Clearing
House shall immediately, without notice, switch off the terminal
of brokers who fail to deposit the margin or cross the limit.
d) Only those members shall be allowed to trade
who have deposited the required deposit against exposure and
losses as indicated in these Regulations.
e) The listed Corporate Brokerage Houses will not
be allowed to deposit their own company’s shares as exposure/loss
deposit.
f) In case a member delays any payment to the
Exchange beyond specified time thrice in a calendar year, his
Initial Margin (Deposit Payable) will be doubled for a period 3
months. In case delay in payment has occurred for 4 times in a
calendar year, the Initial Margin (Deposit Payable) of that Member
will be equal to the amount of exposure taken for a period of 6
months.
4. a) The Contract size shall be determined by the
Board from time to time
before
the opening of the contract. However, the contract size shall be
similar to the marketable lot in the ready market.
b) When a buyer/seller accepts a bid/offer of a
contract (quantity of shares) the contract as per format attached
to these Regulations shall be deemed to have taken place between
buyer/seller.
5. All offers/bids made may be accepted for upto
the limit of the offer/bid and the member making an offer/bid
shall be bound to buy or sell such quantity as is agreed to be
taken up.
6. a) Contract shall be for the period
specified by the Exchange through a
Notice
but shall be for a period not less than one calendar month.
Contract for different months shall trade simultaneously.
b) While opening any Contract the Stock Exchange
shall notify the name of the company and the date of opening of
such Contract, the date of settlement of the said Contract and
other relevant details governing such Contract. Removal of any
company from the Futures Contract shall be done by giving a
reasonable notice.
c) New contract period shall start atleast two
days before the close of the old contract period.
7. Cheques and Pay Order shall be delivered to
the Exchange upto 11:30 a.m. on the day of the settlement
specified by the Exchange.
8. Payments upto Rs.2,500,000/- for the purpose
of Clearing or deposit shall be accepted by cheque. Members will
have to submit pay orders for amount exceeding Rs2,500,000/-.
9. 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.
10. In the event of declaration of dividend, bonus,
right and privileges appertaining to scrips being traded in the
Futures contract Market for which the Share Transfer Books of the
Company are to be closed during the pendency of the settlement,
the Exchange shall predate the last date of business and the
delivery date of that particular scrip
11. The Clearing House shall receive payments from
members on settlement days upto 11:30 a.m. as per the Rules and
Regulations of the Exchange. In case any member fails to make any
payment to Clearing House by 11:30 a.m. the Management of the
Exchange in its discretion may switch off the terminal and
initiate necessary action against such Member as per Regulations
of the Exchange.
12. a) The variation margin (mark to market
difference/loss) shall be calculated
at the
end of each trading day at the closing rate of the day and all the
losses in the accounts of the members shall be settled in cash.
b) In case of losses, members shall be required to
pay the Clearing House 100% of the amount of the losses in cash
with basic exemption of Rs.100,000/-. Further in case of sale,
losses arising out of fluctuations in a particular scrip exceeding
30% of the opening rate of contract, members may deposit shares
actually sold. Losses at the end of each trading day shall be paid
to the Clearing House in cash before the opening of the market on
the next day. In case the next day is Saturday, the deposit
against losses shall be deposited by 12’o clock on Saturday.
c) There shall be weekly clearing on every Friday
at the closing rate of the day and all the profits and losses in
the accounts of the members shall be settled in the cash. However,
the distribution of profits arising out of fluctuations in a
particular scrip exceeding 30% of the opening rate of the contract
shall be held by the Exchange until the settlement of the
contracts. The distribution of profits upto 30% will be paid on
weekly basis on every Friday.
d) In case of price fluctuation of 5% or Rs.1.00
whichever is higher within a day, a special clearing will be
effected and trading in that particular scrip shall be suspended
until such time the outstanding profits and losses are settled in
cash. In case the price fluctuates to the above extent during
first session, the trading will reopen in second session after
recovery of differences. Similarly, in case the price fluctuates
in the second session, the trading will reopen on next day after
the differences have been settled.
13 The Members’ Default and Procedure for Recovery
of Losses Regulations shall also apply to the trading and
settlement of Futures Contracts.
14 It shall be obligatory upon the members involved
in Futures Contracts Trading under these regulations to :-
a) Take margins from their clients in accordance
with the rates prescribed by the Exchange. The Exchange shall
ensure compliance of this requirement through appropriate
procedure of auditing and inspection of records.
b) Identification of clients for effective risk
management by the Clearing House.
15. The Clearing House Members shall be entities that
are separate and distinct from trading members. The Exchange shall
specify capital adequacy requirements both for Clearing House and
Trading Members from time to time with the prior approval of the
Securities and Exchange Commission.
16. Banks and financial institutions shall be allowed
to become Clearing House members in accordance with the criteria
and procedure as may be determined by the Exchange for the
purpose.
17. The Board may with the prior approval of the
Securities & Exchange Commission make changes in these regulations
after giving reasonable notice.
18. In addition to the Regulations mentioned in 1 to
17 above, the Exchange may in its wisdom impose further risk
mitigating conditions to protect the interest of the Exchange as
well as to provide comfort to investors both local as well as
international.
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