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The Karachi Stock Exchange (Guarantee) Limited’s cash management system

Karachi: The Exchange is pleased to announce that in order to enhance the efficiency and effectiveness of Cash Margins through their automated deposits and Release through banks, Cash Margin Management System (CMMS) has been developed through which Brokerage Houses will be able to process the Cash Collateral Deposit and Release requests through their NCHS terminals and same will on-line be transmitted to the respective Banks for their necessary actions. Upon electronic affirmation of Banks, Risk Management System of the Exchange will be updated accordingly.

Effective from Monday, December 19, 2011, a Trial Version will be available in the Systems Menu of NCHS to all Brokers for testing the functionalities and reports. However, the Exchange will announce formal implementation date along with other pro-requisites for said automated system (CMMS) shortly.

Salient features and summarized operational mechanics of the new system are annexed for your guidance and ready reference.

Salient Features

A tripartite agreement between respective Banks, respective Brokerage Houses and the Exchange will be executed.

The Exchange will maintain Single Bank Account for all markets with each Settling Bank.

Cash deposits/withdrawal will be processed without any physical Cash Deposit Slips/Cheques.

Any cash transaction request posted by the Brokerage house will be available on real time basis on the respective bank’s terminal.

Brokerage Houses cannot change/cancel their requested transaction, once it has been selected by the bank.

Two separate users may be available to Brokerage Houses for “Saving” and “Posting” the requests on the Cash Margin Management System of the Exchange.

In case where there is insufficient fund in the Brokers Bank Account, the Broker will authorize his Settling flank to Debit his Bank Account to the extent of available balance and transfer such funds to the account of the Exchange.

The Brokers will be required to unconditionally and irrevocably authorize and instructs the Settling Banks to Debit or Credit their Bank Accounts with the amount reported on Cash Collateral Deposit Requests or Cash Collateral Release Requests on the system.

The Exchange, Banks and all Brokers will accept and acknowledge that the Cash Collateral Deposit and Release Reports shall be in electronic form and shall not bear the signature of any authorized officer of the Exchange.

Operational Mechanism

Brokerage House will access the Cash Collateral Deposit or Release forms through NCHS terminal.

Brokerage House will select the Market, Bank, Request Type (Deposit/Withdrawal) against Exposure, Loss or Both.

Brokerage House will be required to enter the amount that needs to be deposited / released.

After approval/verification, user may confirm the transaction by selecting “Post” option and clicking on the “Submit” button available on the bottom of the form.

Cash Margin Deposits requests will be updated in Risk Management System after their processing by the respective Banks.

Cash Margin Release requests will be updated in Risk Management System immediately after processing by the respective Brokers.

All posted transactions will appear on the Bank Processing Screen and the screen at Member level will be updated with the appropriate messages for all actions taken by the Banks.

The authorized User has option to cancel the transaction until respective Bank has not selected the transaction for progress at their end.

The fund transfer requests will not be sent to Banks as single account will be managed in a bank, therefore, the benefit of fund will be transferred from one market to another as soon as the Brokerage House(s) will post such requests.

Members can view their reports of all Deposit and Release requests based on their need.

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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