MCB Bank barred from futures trading

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KARACHI: MCB Bank Limited has been expelled from KSE Deliverable Futures Contract list for not reaching at the minimum requirement of free-float in the market, said an official at the Karachi Stock Exchange (KSE).

 

The official said that there was requirement to improve turnover by 0.25 percent of the total free-float in the futures market in six months. “MCB failed to reach the level and therefore it was expelled,” he said.

 

MCB was expelled through a notification issued on April 16, 2013. Pakistan Reinsurance Company Limited was also barred for it too failed to meet the criteria.

 

A MCB spokesman said their name had been removed due to low volumes in the futures market under the standard KSE procedure.

 

MCB Bank is a heavy index stock in the regular market but it did not perform well in the futures market. However, July and August contracts would be settled before removing its name from the list. “One rupee decrease or increase in the MCB share price brings about six percent change in index,” said a trader, adding “thus, MCB affects heavily the stock market.”

 

In the regular market, MCB’s 3.01 million shares were traded Tuesday with a share value increasing Rs12.37 to Rs261.23.

 

Khurram Schehzad, vice president and head of research at Arif Habib Limited, said that MCB was an active stock in the regular market but its performance in the futures market might have slowed.

 

“Volumes in the future market might shrink by some points with the ouster of the MCB,” he said.

 

Shares turnover in the futures market stood at 30.37 million shares Tuesday compared with 28.36 million shares traded in the previous session. Fauji Cement Company Limited July futures led the market with 4.82 million shares with decline of five paisas to Rs14.60 per share, followed by Pakistan Telecommunication Company Limited July futures with 4.24 million shares with fall of 18 paisas to Rs26.30 per share.

 

A KSE document reported 96 in green and 21 in red out of 117 companies’ shares traded in the future market Tuesday.

 

A trader said that around 30 companies were active in the future market, while names of other companies remained part of the list but in real terms no trading was noted in their shares.

 

The KSE report showed a list of 125 companies on Monday, but contracts were made in only 28 companies and MCB was missing. The active companies were Arif Habib Corp, Engro Corp, Fauji Cement, Lotte Chemical Pakistan, Lucky Cement, National Bank of Pakistan, Nishat (Chunian) Limited, Nishat Mills Ltd, OGDC, PPL, PSO, PTCL, UBL and other companies.

 

Stock Index Futures 30-Index was launched in 2008 but it recorded no activity till August 2012. “Currently, only two percent trade of ready market takes place in the future 30-index product,” said an official. “The Future trading in 30-index is further diverted to Lahore and Islamabad stock exchanges as well and trade in that index is likely to start by September.”





Courtesy:  The News


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