KARACHI - The government will initiate rescue measures to reassure the confidence of investors and brokers before the removal of price floor, as the Karachi Stock Exchange (KSE) Tuesday formally announced to remove the floor on October 27. Amidst continued recession in the stock markets, Finance Minister Naveed Qamar had advised the National Investment Trust (NIT) to get down to lay out a new market stabilization fund of Rs20 billion besides the already launched Equity Market Opportunity Fund (EMOF) worth Rs20 billion, Tariq Iqbal Khan Chairman of NIT told The Nation. "We have completed the legal documentation and structure of the fund and are waiting to get the go-ahead from the government to launch the new market fund," Tariq said. The Chairman NIT said that as soon as the SECP gives license to launch this fund, the fund would be launched in the market without any delay. Tariq said that the government would arrange the required investment in the new fund, while the role of NIT in this fund is only providing managerial skills. "If we received the permission of government the fund would be launched before the removal of floor," Tariq said. In addition to this, National Clearing Company of Pakistan (NCCPL) has extended the maturity period of all outstanding CFS contracts from 22 days to 44 working days existing on the close of business on October 9. Furthermore the NCCP has increased 10 per cent security margins on outstanding CFS Mk-II positions. The NCCP said that moves taken on Tuesday were aimed to further improve risk management and ensure orderly markets on the removal of floor based price mechanism at the stock exchanges. The NCCP statement said that the global financial markets were facing critical shortage of liquidity and the stock markets suffered steep falls globally. Similarly securities markets in Pakistan have also suffered a steep fall in a short time and as a result thereof the stock exchanges have fixed a floor in respect of the stock prices as a market stabilization measure. On account of the liquidity shortage in the financial markets in Pakistan the liquidity shortage in the financial markets in Pakistan the financiers in the CFS Mk-II Market have shown their inability to provide their committed funding. The NCCPL said that SECP, stock exchanges and NCPL held extensive consultations with the authorized financiers including banks, financial institutions, broker financiers, mutual funds and other investors to establish that certain measures are required to protect the integrity of the securities markets in Pakistan. In an another statement issued by the KSE regarding the board meeting held on Tuesday said that over the past few weeks, KSE has been in active consultations with the Ministry of Finance, SECP, State Bank of Pakistan and other stake-holders to develop a set of measures for achieving market stability. In this context three critical areas were identified as liquidity; risk management; and restoring investor confidence. The Board meeting reviewed the progress made on these efforts and noted that some recommendations have been implemented (announcement of buy back of shares, reduction in CRR) while other recommendations (equity fund, put options, change in CFS margining regime, etc.) are being processed. The final details of all the stabilization measures will be announced by the respective authorities (Ministry of Finance/SECP). The statement said that government has informed the board of KSE to take all stabilization measures before the removal of floor on Oct 27.