Badla financing cfs margin financing

The omitted proviso read as follows: Such option shall remain operative till completion of the said contract. The provisions of sub-rule b and c would not apply where, royalty is covered by section Fees for technical services.

Badla financing cfs margin financing

Margin financing - old wine in new bottle? Last Updated on Tuesday, 30 November Stock brokers are about to convince authorities to re-launch the same leverage product after rectifying it on the Karachi bourse, which they had banned in April this year.

They had identified the product as the main cause of historic crisis. Lakhani, who had also been the Chairman-KSE, is heading the camp of brokers strongly opposing the reinvention and revival of Badla system i. But he is not against the introduction of conventional and internationally practiced Margin Financing system here, he clarifies.

One of the major differences between the internationally practiced MF and the local MF is the involvement of brokers in Badla financing cfs margin financing financers lenders and financees borrowersThe News learnt.

In conventional MF, the banks are the only eligible financing party to many potential stocks investors and there is no middle man role available e. While in the proposed MF, brokers would bridge between financers and financees.

Bond Market -

In this system, unlike the conventional MF, any financially sound individual or institution can be the financer. But the major hurdle in launching the world wide practiced MF product here in Pakistan is that banks are reluctant to directly finance stocks investors, one of the senior professionals told with the condition of anonymity.

Badla financing cfs margin financing

In conventional MF, the total risk is owned by banks and if borrower client loses the lender too. But to remain safe from losing in a bear market, banks collect deposit of a certain percentage on the total amount of financing from the share purchaser e.

So this is the risk factor, which is hindering the execution of conventional Margin Financing here since its full-fledged introduction in And moreover, the same hurdle i.

CFS MK-III is must in market to avoid downsizing at brokerage houses, which cannot continue to sustain with thin turnover in a cash strapped market these days.

Habib is believed to be leading brokers seeking the resumption of CFS MK-II like product in the market after incorporating so many meaningful changes to make the product viable.


Why he is against the globally practiced Margin Financing product, Habib says this product would be available to only potential brokers and not to needy ones. Therefore, this product would make the rich brokers richer and the poor poorer, he added.

Gikas A. Hardouvelis | IDEAS/RePEc

He maintained that products, which were designed on international lines i. Cash Settled Futures, are available there in markets for the last couple of months, but these so called new products received the zero response, as not a single share was traded on this counter.

So such products are not compatible in local markets, he underlined. Advocating the re-launch of modified CFS MK-II which Lakhani terms the home-grown Margin Financinghe believes there is no systematic risk involved in the product and added rules for default financer or financee and distribution of loses are there and defaulters should be dealt accordingly.

Yasin Lakhani replying to a question that why he is against the introduction of modified CFS MK-II, said brokers with conglomerates of multiple businesses under one roof i. He believes that regulators should not allow the revival of old Badla financing and continue to work on the launch of internationally practiced Margin Financing, as India did in near past.

Habib and Lakhani, both the brokers, claim to have majority votes in favour of their moves. The group felt the deficiency of a leverage product and submitted its recommendations to SECP in first meeting held on May 05, BADLA FINANCING, CFS & MARGIN FINANCING PRESENTED BY: benjaminpohle.comYAR SALEEM SHEIKH () BADLA FINANCING Definition: Badla financing is a mechanism to carry forward a speculative trade.

History: Badla was a carry forward mechanism for the transfer of shares which was introduced in India in the. Margin Financing: parallel with other modes of leverage financing SECP is continuing its efforts to promote Margin Financing.

Margin accounts allow investors to buy shares with a relatively small amount of cash or margin up front by using the assets currently held in their accounts as collateral. BADLA FINANCING Definition: Badla financing is a mechanism to carry forward a speculative trade.

History: Badla was a carry forward mechanism for the transfer of shares which was introduced in India in the Bombay stock exchange as a solution to the perpetual lack of liquidity in the secondary market. It was banned in by the Securities and Exchange board of India (SEBI) in UNIT IV Fiscal policy - central finances and new fiscal policy - Direct and indirect Tax structure VAT MODVAT - Service Tax problems and reforms -Expenditure Tax - Public debts deficit financing.

UNIT V Legal environment of business - Monopolies - Company Law Competition Act Jul 15,  · As unending wait for leverage product continues in Karachi Stock Exchange after failure of earlier Margin Financing, CFS MKII, CFS and Badla systems and the.

The PSX management has estimated that the current volume of badla financing in the stock market was around Rs10 billion, while that of margin trading system financing was Rs14bn.