Awareness Presentation

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Awareness Presentation
Revised RMS Features Under CFS Regulations
Karachi Stock Exchange

• By
• Sani-e-Mehmood Khan DCM, IT

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Revised RMS Under CFS Regulations
Karachi Stock Exchange

• Segregation of CFS Market And T3 Markets
• Financier Purchases Under CFS NOT to be Netted
  With Sale in T3 Market at scrip level
• CFS Market to have Additional Margins of 2 to 5
• CFS Margins to increase in proportion with
  increase in KSE100 Index
• CFS Financier to Keep Financed Securities in a
  Separate account with CDC.
• Leverage Positions in CFS And Derivatives not to
  exceed beyond 15 times of a brokerage houses Net
  Capital Balance

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Karachi Stock Exchange
CFS Regulation 4(1) States THAT
For The Purpose of Risk Management, the CFS
Market Shall be separate from T3 Market and
purchases of a security by financier under CFS
shall not be netted against his sale in the same
security in T3 market.
Netting Shall Not be Allowed for trades carried
out in CFS as CFS Financier with T3 Market
Trades. Hence the tickets of CFS First Ticket buy
and Second Ticket Sell conducted with the
perspective of CFS Financier shall not be netted
with T3 trades of the corresponding scrip.
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Karachi Stock Exchange
Explaining CFS Regulation 4(1)
Ready Business Scenario
Assumed Open Position
Current Exposure Computation
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Karachi Stock Exchange
Explaining CFS Regulation 4(1)
Ready Business Scenario
Assumed Open Position
Revised Exposure Financee
Revised Exposure Financier
Revised Exposure Exposure As Financee
Exposure As Financier
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Karachi Stock Exchange
CFS Regulation 4(2) States THAT
The rates of Margin as shall be determined the
board for the purpose of CFS market shall be
graduating automatically. The Margin shall be
increased in proportion to the increase in KSE
100 Index
The KSE Board has approved the following CFS
Market Margin slab ranging from 2 to 5 for
outstanding business of CFS Financier
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Karachi Stock Exchange
Explaining CFS Regulation 4(2)
As Per Fore cited Example Only Broker 003 is
Subject to CFS Graduating Margin
Apply Margin Slab Percentage on CFS Financier
Exposure (500,000 X 2) / 100 10,000
The Demand of 10,000/ as per CFS regulation 4(2)
shall be further enhanced by the increase in
proportion to the KSE 100 Index
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Karachi Stock Exchange
Explaining CFS Regulation 4(2)
The Demand of 10,000/ as per CFS regulation 4(2)
shall be further enhanced by the increase in
proportion to the KSE 100 Index As per
illustration below.
CALCULATION 1 Opening Index on August 22,
2005 7311.92 Closing Index on September 15,
2005 7979.48 Increase in index () 9.13
7979.48-7311.92100 7311.92
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Karachi Stock Exchange
Explaining CFS Regulation 4(2)
The Demand of 10,000/ as per CFS regulation 4(2)
shall be further enhanced by the increase in
proportion to the KSE 100 Index As per
illustration below.
Increase in index () 9.13
7979.48-7311.9210 7311.92
10,913 will be demand for broker 003 under CFS
Regulation 4(2) Against an exposure of rupees
500,000/