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The Karachi Stock Exchange (Guarantee) Limited’s Launch of Stock Index Futures Contracts on Sector Indices

Karachi: Karachi Stock Exchange is pleased to announce the launch of Stock Index Futures Contracts on Tradable Sector Indices from the Month of January 2012 in the following sectors.

Tradable Sector Name Number of Stocks % of Entire Sector Free Float Composition of Tradable Benchmark
OIL AND GAS 4 89% OGDC, POL,PSO, AND PPL
BANKING 7 82% MCB, NBP, UBL, HBL, BAFL, BAHL, ABL

Sector Index Futures offer opportunities to investors wishing to gain exposure in specific sectors without actually buying each share in that sector. Such investors can use SIFC on Sector Indices to take positions in an entire sector which can be purchased and sold easily and inexpensively.

SIFC CONTRACTS on tradable benchmark indices are agreements to buy or sell a standardized value of a tradable sector index thereby allowing investors to track the performance of a basket of securities in a given benchmark index. The mark-to-market losses are collected/paid daily, with cash settlement @ Rs. 5/- per index point movement and concluded on maturity (without delivery requirement).

BASKET ORDER WINDOW is also being made available in KATS to facilitate efficient hedging mechanism for small investors, high net worth individuals and financial institutions. The Basket Order window shall allow investors to place multiple market orders in ready market with same time – priority through a single mouse click for all stocks within a tradable sector index. Once an order set is placed, the basket window will show the execution status for each line item in the basket.

Now with the reduced lot size of 1, it is now more practicable than ever for small investors to gain exposure of leading Oil and Gas stocks starting from a cumulative value of Rs. 50,000/- by paying 12.5% margin (i.e. minimum Rs. 6,500/-). Moreover, basket stocks may be bought in the smallest denomination of 1 stock each which can be hedged by selling a similar index futures contract.

In order to facilitate a better understanding of the said product, the management has arranged a series of awareness presentations for all market participants which shall encompass introduction to tradable sector indices, their trading, their working, naming conventions and the Risk Management regime.

Detailed schedule of these presentations are given below:

Date Time Venue
November 25, 2011 04:30 p.m. KSE Auditorium
December 1, 2011 04:30 p.m. KSE Auditorium
December 8, 2011 04:30 p.m. KSE Auditorium
December 15, 2011 04:30 p.m. KSE Auditorium
December 22, 2011 04:30 p.m. KSE Auditorium

For more information, contact:

Karachi Stock Exchange

Tel: (92-21) 111-001122

Fax: (92-21) 3241 0825, (92-21) 3241 5136

Email: info@kse.com.pk

Web: www.kse.com.pk

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