SECP Chairman Razi-ur-Rehman said on Friday at the inaugural ceremony of National Commodity Exchange Limited (NECL) at a local hotel that Karachi Stock Exchange (KSE) had not completely implemented the risk management rules, which restricts the CFS limit, and added that it would not be raised till 100 percent implementation of the rules was ensured.
He said: "We have received KSE's request for raise in the CFS limit, but it is not possible in the current situation." He said that work on CFS Mk2 was in the final phase and would be launched within next two months. He linked CFS raise with risk management implementation, saying that after 100 percent implementation of risk management rules, SECP would consider the request of KSE for raise in CFS limit, and withdrawal of cap.
"If there is any plan pertaining to changes in the CFS limit then SECP will inform 15 days in advance to avoid any objection from the stakeholders," he added. "We want transparency in the process; therefore, it has been decided to inform members some 15 days earlier of the changes," he said, and added that the liquidity problems at KSE would be solved after the announcement of new CFS.
Regarding appointment of new chairman of KSE, he said that KSE board of directors meeting would be held next week, in which new chairman of the board would be selected.
Earlier, addressing the inaugural ceremony of NCEL, he said that Pakistan's first national commodity exchange would be helpful in the development of farming in the country and strengthening the economy. He said that 'commodity exchange' was a basic need of any country, especially the developing countries like Pakistan, and the basic aim of it was to boost the economy.
NCEL will help the government and farmers in the future planing regarding commodities and it will provide a platform to traders for future trading in different commodities, he added.
He appreciated the role of the three stock exchanges for establishing the national commodity exchange. NECL Chairman Shaukat Tarin said that the national commodity exchange would work five days in a week and gold had been selected as the first commodity to be traded on the board.
He said NCEL is a unique platform for future trading of commodities and has been made for promotion of farming. Trading at the NCEL will not bring about price hike in the local market, as it will primarily provide benefits to the consumer, he added.
NCEL Managing Director Asim Jang said that in the first phase of trading, gold had been selected, while other commodities, including rice, cotton and wheat, would be trade later. He said that trading in commodity exchange would start with three-month gold futures contracts from Friday and later other commodities including rice, sugar, wheat, crude palm oil and cotton yarn would be included in the trading process by the end of 2007.
Amjad Khan, head of IT, said that NCEL had got cent percent secure and state-of-the-art data centre with biometrics accesses control and fire protection system. He said that in the first phase of gold trading, the 10-gram gold would be traded.
Saleem Chamdia, former chairman of NCEL, said that SECP had issued NCEL licence in 2002 and now after hard work of five years "it has come to live". On the occasion, SECP Chairman press the button to start the trading in gold, while Arif Habib, Chairman of Arif Habib Securities, Haji Ghani Haji Usman, Nadia Malik, manager marketing and external relation also attended the function.