KARACHI, Nov 10: A bevy of bad news struck the equity markets on Monday. While two stock brokers were declared ‘defaulters’ for failing to settle market debts; two income funds declined further redemptions, citing lack of cash.

Stock brokers, Sikandar Ismail Bagasra and Ismail Abdul Shakoor, were declared ‘defaulter’ by the National Clearing Company of Pakistan Limited (NCCPL).

NCCPL, which provides access to the NCC systems, sent notices to both the battered brokers, citing regulations under which they had failed to clear their loss amounts within stipulated time and exposed themselves to be declared “defaulter”.

The final loss remaining unsettled by Bagasra stood at a huge Rs51.4 million as on close of business on November 6, after the regulating body (NCCPL) had recovered Rs1.6 million “through the selling out of retrieved shares”.

The final loss amount remaining unpaid by Ismail Abdul Shakoor at the end of the specified time amounted to Rs5.4 million, after the recovery of Rs8.3 million through selling out the retrieved shares.

The copies of notices were forwarded to the stock exchanges and the NCCPL said that default proceedings would be initiated by the NCCPL and the KSE in accordance with the relevant provision of their regulations and procedures.

Income funds: KASB Funds Ltd., an asset management company, declared on Monday that it had opted to suspend redemption of two of its income funds: the KASB Islamic Income Fund (KIIF) and KASB Liquid Fund (KLI) from Nov 7.

The company argued that under the prevailing “extraordinary circumstances”, the financial and capital markets of the country were under severe liquidity constraints.

It observed that the mutual fund industry had witnessed redemptions in income and money market funds of approximately 30 per cent in the last one month. Redemption in the KIIF and KLI were stated to have been witnessed at 35 per cent, since the beginning of October.

“To date all redemptions have been paid within the stipulated time period through internal generation and borrowing arrangements,” the company said and added that since the situation in the financial and capital markets continued to deteriorate, it had led to circumstances which KASB Funds “deems to be extraordinary”.

The company contended that “further redemptions would result in disposal of investments at prices which are not reflective of their asset quality, which is why distressed selling of investments would seriously prejudice the interest of the Fund and its unit holders”.

The company said it was therefore announcing suspension of redemptions of units of KIIF and KLI and a notice was also being issued in the newspapers. The company said it derived authority of suspension of redemption by “invoking Clause 13.2 of the Trust Deed of KIIF and KLI, clause 4.11.2 of the Offering documents and Regulations 66(9) AND 66(10) of the Non-Banking Finance Companies Regulations, 2007”.

The company told the KSE: “We shall be intimating your office of the resumption of redemption transactions of KIIF and KLI in due course of time, in the manner prescribed in the applicable law and regulations”.