Law: Brokers and Agents Registration Rules, 2001

Section: 8

Brokers and Agents Regulation Rules, 2001--Rr. 8 & 12---Regulations Governing Future Contracts of Karachi Exchange (Guarantee) Limited, Regln.3(b)---Violation of Regulations---Imposition of penalty---Examination of the information provided by the company had revealed that 21 times, during the period from March 10, 2005 to March 25, 2005, company had net sale position in future contracts, which were in excess of the prescribed limit of Rs.50 million---In contravention of the requirement of Regln.3(b) of Regulations Governing Future Contract of Karachi Exchange (Guarantee) Limited, Company had failed to either deposit with the Exchange the actual shares sold over the prescribed limit or submit to the Exchange the documentary evidence that such shares, were lying in the Central Depository Company of Pakistan or a Bank or Finance Institution on the given dates---Based on such findings a show cause notice was issued under R.8 of the Brokers and Agents Regulation Rules, 2001 stating that company had prima facie contravened. R.12 of the said Rules---Chief Executive of the company in response to said show-cause notice, appeared and submitted written submissions---Company had been established to have not fulfilled the requirements of reporting/taking action as envisaged, under Regln.3(b) Regulations Governing Future Contracts of Karachi Exchange (Guarantee) Limited---Certain extenuating circumstances, however, had emerged from company's practice of supplying the requisite evidence under Regln.3(b) of Regulations Governing Future Contracts of Karachi Exchange (Guarantee) Limited, only when required by the Exchange, which could have persuaded the company to believe that it had discharged its obligation under said Regln.3(b), which clearly it did not for reasons stated---No evidence of "short selling" had been revealed from the examination of the record provided by the company---Taking a lenient view in the matter, in circumstances, punitive action under R.8 of Brokers and Agents Regulation Rules, 2001 would not be taken against the company and 'caution' in that instance to the company would suffice---Company was directed to ensure that full compliance be made of all…

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