SECP quashes rumors of T+2 settlement being brought back in the market

Securities and Exchange Commission of Pakistan (SECP) has quashed rumors circulating in the market regarding the change in the settlement regime which has recently been applied in the market. The KSE-100 index has been battered since the start of February where it was trading at 188,000 points. There have been consistent sessions where the index has lost more than 5,000 points as the index opened at 164,000 points on the morning of Thursday. 

The opening on Thursday saw buoyed support in the index with the market trading in the positive region. In order to rationalize the increase in index, there was a feeling that the rollover week was nearing its end which was causing the rally to take place. The rollover pressure has dissipated to a huge extent which led to fresh buying being carried out.

There has been a feeling in the market that the index has been impacted by the recent implementation of the T+1 settlement regime which used to be T+2 settlement before the 9th of February. What this means is that if an investor buys a share on Monday, he would have to make sure that the funds for this purchase were available by Wednesday. With the settlement regime being changed, the client would see less time to procure the funds and would face additional restrictions.

There was a sense in the market that this need to fulfil the needs of the market was causing less buying in the market leading to the drop in the index. Once there were rumors that the regime was going to be reversed, the market started to gain yet again and the index started to increase. Before these rumors could gain any traction, the SECP stepped in and quashed any such rumors. The spokesperson for SECP reiterated that no such move was being contemplated and that these were baseless rumors being spread in the market. These are being purposefully spread in order to misguide the investors. The new regime has been enforced and functioning properly. Things will settle down in a few days.

While the rumors were flying around, sources close to Profit confirmed some of the rumors saying that phasewise implementation was being contemplated. Brokers from Karachi refuted any such claims stating that they had not heard anything of this sort and it was highly unlikely that the regime would be rolled back in such a short time. Mohammed Sohail, CEO of Topline Securities, stated that this was “rollover pressure easing as one day was left before the settlement of February futures.”

With the confirmation from the SECP, it seems like the rumors will quiet down in the market in a few trading sessions. The index still closed 4,200 points in the green for the trading session for Thursday. The real test will be when the market opens on Friday.