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Trading
& Settlement System:
The Karachi Stock Exchange has introduced an state-of-the-art
computerised trading system known as Karachi Automated Trading System
(KATSTM ) to provide a fair, transparent, efficient and cost effective
market for the investors.
Currently, the exchange conducts one trading session from Monday to Thursday and two sessions on Friday.
The
Trading is divided into four distinct segments, each of which has
its own clearing and settlement procedure. These are: T+2. Provisionally
Listed Companies, Spot (T+1) Transactions and Future Contracts.
T
+ 2 Counter:
Transaction in this segment are settled through the Clearing
House that nets out the purchases and sales and the financial obligations
thereon of each member/firm for the notified clearing period and
issues instructions for deliveries of netted outstanding business.
Payment from and to members are routed through the Clearing House.
For the securities declared to be “eligible securities” by the Central Depository Company the Clearing House procedure remains the same as outlined above except that the KSE does not permit their physical settlement.
In order to handle the clearing of all the three stock exchanges
of the country under one roof, the National Clearing and Settlement
System (NCSS) has been introduced. NCSS is managed by Central Depository
Company of Pakistan Limited.
Futures
Trading in Provisionally Listed Companies:
The shares of companies which make a minimum public offering
of Rs. 150 million are traded on this segment from the date of publication
of offering documents. The period of contracts of each scrip is
notified by the Exchange. The outstanding contracts carried out
under the provisionally listed companies are settled on the settlement
date and members are not allowed to transfer their positions to
the Ready Clearing Board or any other Board. On formal listing,
the trading in the shares of the company are shifted to the Ready
Board Counter under T+2 Settlement System from the date of formal
listing.
Spot
/ T+1 Transactions:
For about 5 days before the closure of shares transfer
book notified by the company, transactions are settled on T+1 basis.
For non-CDC securities the delivery and payment is settled through
the Clearing House of the Exchange, however, delivery is tendered
directly between the buying and selling members as per the instruction
of the Clearing House.
Future
Contracts:
Under the Regulations Governing Future Contracts, trading
in Future Contracts started in July 2001. Companies
traded under Future Contract and the Contract is fixed for a
period of one month.
Transaction Costs:
- Brokerage
on transactions are freely negotiable between the brokers
and
clients.
- Stamp duty: Stamp duty is charged at 1.5% of the face value of the shares under the physical form of transfer. There is no stamp duty for transfer settled through the Central Depository System, however, there is a one-time stamp duty at the rate of One Paisa per share at the time of deposit of securities in the CDS.