The SECP claims that MF reforms will allow the securities brokers to provide financing to their customers in a more regulated manner and will facilitate investors who wish to undertake leveraged trading and need finance for purchasing shares. As a result, position limits and exposure limits have been liberalised to allow more liquidity.
However, the reforms have failed to impress some stakeholders who think the situation will remain the same.
Now the MF facility will also be available to investors against their net purchases at expiry of Deliverable Futures Contracts allowing them to honour their settlement obligations in futures segment, thereby further reducing settlement risk.
For meeting the funding needs of investors, the MF facility will now be available on T+1 against their net purchases in ready market segment.
Moreover, MF financiers can now collect market-to-market (MTM) losses in any manner mutually agreed under the financing agreement signed with the borrower instead of the earlier stipulated mandatory collection of MTM losses in cash only in case of 5 per cent decline in MF financed security value.
