KARACHI - The fate of floor mechanism is expected to be decided shortly after the new election of the board of directors of the Karachi Stock Exchange (KSE), which has been set for Dec 2, 2008. While the existing board of KSE in its long hours meeting held on Monday again failed to reach a decision about bringing the market into normal trading. A source, who attended the meeting, said that several issues were discussed in the meeting but did not take final decisions regarding the removal of floor rule and change in the limit of lower lock. On the other hand, the fear lurks in the back of minds of the KSE members about the unknown fear after the floor is removed. There is deepening mood of pessimism over the possible removal of floor. The broker community holds a view that the floor mechanism is likely to be removed some time mid January (2009) and there is also no early hope of injection of market support fund. It seems that government would inject market support fund into the stock market after getting financial aid from the Friends of Pakistan (FoP), which is expected to be achieved in January 2009, as China, SArabia, USA etc, who have asked for endorsement from IMF before any funds are disbursed, brokers said. However, battered investors worried by uncertainty caused by the imposition of floor rule, have in desperation started selling off their shares in the off-market trading to those who have funds to buy them. According to unofficial information available in the off-market trading, shares of blue chip companies were also seen traded at 40 per cent lesser than the official closing price and out of total share transactions in the off-market 62.5pc shares were transacted in the securities of nine companies including Unilever, Bank Alfalha, Bank of Punjab, Muslim Commercial Bank and others. A broker said that around 70 brokers of the KSE have been participating in the off-market share transactions. While out of them only five brokers were actively participating in the share transactions in the off-market. Around 86 per cent share transactions in the off-market trading was made by these five brokers including BMA Capital Management Limited, JS Global, IGI Finex Securities and Azee Securities. "With hardly any activity on the official cash counter, a substantial increase in off-market trading was seen along with activities in the odd-lot counter where there is no price floor applicable, thus the current Index level is actually in the range of 6,000 to 6,400," a broker said. This off market trading indicates the nervousness and uncertainty in KSE which is also eagerly and hopefully looking forward to the promised government market support fund in the seven government owned companies to at least save the KSE benchmark index from hitting rock bottom, he added. It was the fear that if allowed free hand the KSE incur huge decline and would eliminate a large number of members altogether that the board of directors of KSE decided to slap the floor on August, 27, 2008 which has at least given some relief to the members and investors. However, extension of period for floor rule is causing nervousness and the investors and members of KSE are apprehensive that once the floor was remove the stock market would be devastated. That is why the members of KSE had agreed to the extension of the floor and hoping that the government would bring promised fund of Rs20b into market. Constant floor mechanism has also resulted in lay off. Unofficial figures available at the KSE show that 40pc of the staff employed at the KSE by various brokerage houses have been relieved from their jobs. This is perhaps first time that as such huge lay off was seen in the KSE. In the past brokerage houses had laid off their employees when their businesses showed no better returns or other job related issues, while in present case the brokerage houses are failing to generate income to pay their staffers, have decided to send them home. Another broker said that it is difficult to evaluate the magnitude of jolt that the market is going to receive soon after the removal of floor rule. The NIT has been waiting to get the go-head signal from the government and all mechanics related to the market support fund had been planned out and only permission of the government is require to launch the fund in the stock market, sources in the NIT said.