The morning announcement of KSE said: "Members are hereby informed that the Board of Directors of the Exchange, held an emergent meeting on Thursday at 8:30 am and considered the present market situation".
"The management informed the Board that all the risk management systems are being effectively pursued and adhered to by all the members," it said.
However, considering various representations and apprehensions of the market participants, the Board has decided to extend the futures contract of March 2005, whereby the date of closure of the contract is extended from March 25 2005 to April 1, 2005 and settlement date is extended from March 30, 2005 to April 6, 2005 (one week)."
"The above decision has been taken in accordance with Regulation 6 (a) of the Regulations Governing Futures Contract read with clause B (a) of Notice No KSE/N-1159 dated February 18, 2005," said the notice.
At the proposal of the Chairman, the Board decided, unanimously, to request the SECP to extend the time limit for closure of Group Accounts by at least three months, it said.
INVESTORS PROTEST: Small investors, frustrated with the huge losses in share business, gathered at the Karachi Stock Exchange premises to protest against the depressing market on Thursday and turned violent when they were advised to stop their agitation.
Some 2,000 small and medium investors chanted slogans against the big brokers, alleging that they were trapped by a plan. At least, six people were arrested from the spot.
The KSE-100 Index slashed about 2200 points in just six sessions leaving no option for the investors to come out from the historically fast decline.
Frustrated investors found no way to express their feelings and chose to demonstrate against the KSE. They pelted the KSE building with stones and broke some window glasses. Police arrested at least six of them and dispersed the protestors.
However, during this incident the trading remains intact and did not stop at any moment.
While brokers were struggling to come out of the trap of future trading which brought huge losses, thousands of investors were defaulters.
The investors said that they were still booking losses, as they were unable to sell their shares because no buyers were available to buy 'blue chips' shares.
They said they were overburdened with the Badla payments, which was still continued. The losers' only hope was in the re-rise of the stock market.
"I am unable to pay any more as I have to pay Rs 250,000 per day as I cannot sell OGDC and NBP shares because no buyer is available. If the market does not increase, I don't know how I can make payments as I am finished," said a small investor, who took over exposure on the advice of his broker.
All hopes to settle the crisis with above deferment evaporated within minutes of start of trading activity as all major heavyweight scrips went into downward lock position. The major brokerage houses blamed the Board for the morning decision and felt that this deferment would result in the market eroding further by as much as 25 percent.
Business Recorder understands that the Securities & Exchange Commission of Pakistan was also unhappy at the morning decision and asked the Board to reconsider and also look into the possibility of removing downward locks on five major scrips which include OGDC, PSO, PTCL, PPL, etc.
The KSE Board went into another emergent meeting in the afternoon to review the morning deferment decision. Prior to the meeting prominent players like Aquil Karim Dhedi and Arif Habib were called in to give their views on how to tackle the crisis.
Subsequently the Directors also consulted SECP Chairman Dr Tariq Hasan and Commissioner for the Securities Exchange Shahid Ghaffar and examined the legal implication for reversing the earlier announcement. KSE Chairman Yasin Lakhani and Managing Director Moin Fudda on the advice of other directors decided to withdraw the morning decision and announced that March future contracts would be squared off on the due date and settlement will take place on next Wednesday.
Fudda reportedly told the Board that the outstanding deals were to the tune of Rs 28 billion on either side. And outstanding deals, the Exchange was holding Rs 6 billion in exposure on both sides ie for Rs 56 billion the loss exposure held by the exchange was Rs 12 billion.
He further said that the National Clearing System had Broker-to-Broker functionality just as it had Exchange-to-Exchange functionality. Therefore, all privately negotiated deals could be registered with the system on the closing price of the day and delivery ensured with no risk of default.
Friday will be a crucial test day for the exchange. If the major players do step forward with the funding indicated by them to the Board and aggressively go into the buying mode they could halt the six-day slide. The market sentiment would only change once consolidation has taken place in few more sessions. Until then nervousness among the players will persist.
The market players are also keen to obtain a three-month extension on the group account expiry date of March 31, 2005. The KSE management has to officially file the request with the SECP next week and the SECP Board has to give its consent after examining the issue thoroughly.