KARACHI- Karachi Stock Exchange has planned to enhance limits of falls and gains in phased-manners. In the first phase, the board may approve enhancing limits up to 7.5 percent from five percent at present. KSE is also rationalising weight of individual companies in its benchmark 100-share index, said KSE officials at a press conference here on Wednesday.

They also announced to have increased the limit of Investors Protection Fund (IPF) to Rs75 million from Rs25 million each broker.

Responding to a question, Deputy Managing Director of KSE, Haroon Askari said that the board of directors of KSE would consider enhancing limits of maximum fall and maximum gain in individual stocks in its next meeting. The change in limits would be made in line with practices adopted at world capital markets, he said, adding that the present limits were kept at five percent to avoid volatility at a time when trade turnover was low at KSE.

Managing Director of KSE, Nadeem Naqvi said that the management of Exchange was also considering rationalising weight of individual companies in its benchmark 100-share index.

"We may change the base of benchmark index to free-float of stocks from price at present," he said. "This will end dominance of a few of large capitalised stocks in the index." He said that a team of Exchange has already carried studies on the subject, while India has already done it successfully in past.

"The practice, if adopted at KSE, will reduce the weight of Oil and Gas Development Company in 100-share index to seven percent from 14-15 percent at present. And the weight of Nestle Pakistan will decline to one percent from six percent now."

The Exchange, therefore, is already managing a free-float base 30-share index. But this is not the benchmark index.

Naqvi said that the board of directors has already approved increasing the limit of Investors Protection Fund (IPF) to Rs75 million from Rs25 million each broker. "The Fund is made available in case a broker is declared default on account of clearing dues of its clients." "The increase in the limit of Fund is made from back date of 2008 crisis, as many of the investors are still waiting for receiving cheques against their claims." As many as ten brokers were declared default in 2008 crisis, while the number of claimers was standing around 5,500 to 6,000 investors. They had submitted claims of about Rs2.6 billion.

The Exchange had done audit of some 3,600 investors worth Rs1.3 billion, he said. Those investors who had yet not received full payments against their claims due to shortage of such protection fund, now will receive more cheques, he added.

He said that investors claiming up to Rs 0.5 million have received full payments while others have received around 44 percent payment against their claims. He said that the management of the Exchange was trying its best to make loans available to investors so that stocks could discover their prices.