Margin Financing System (MFS) Revised Features Effective From June 19, 2017

Revised Features Particular Previous Revised 1. Financing Participation Ratio (FPR) Minimum 10% of FPR is deposited by Financee and reaming FPR is deposited by Financier on the Settlement Date Minimum requirement of 10% FPR in cash has been reduced to 1%. Financier to maintain remaining FPR (25% or VaR whichever is higher) in the form of Securities 2. Financier Acceptable Securities (FAS) Broker Margin Financier is required to maintain FAS (difference of total FPR and cash contribution of Financee) in the CDS Blocked Account . The requirement to move FAS in the Blocked Account of Financier has been removed and it can be maintained in the respective sub-account of a client

Recommendations of the Committee Particular Previous Revised 3. Tri-Partite Agreement N/A In case where Broker Margin Financier borrowed funds from banks, in such case, tri-partite agreement between Broker Margin Financier, Bank and client will be executed

Recommendations of the Committee Particular Previous Revised 4. CDS Sub-Account of a Client in MF Blocked Account Only house account of Broker Financier is maintained in the MF Blocked Account On the basis of tri-partite agreement, CDS sub-account of a client will be opened in MF Blocked Account subject to fulfillment of necessary requirements. Copy of such tri-partite agreement should be provided to CDC along with other necessary supporting documents. Copy of such agreement should also be provided to NCCPL CDC Access, UIS of NCCPL will be mandatory for opening of this sub-account

Recommendations of the Committee Particular Previous Revised 5. Settlement of MF Transaction All Margin Financed Securities are delivered in the Broker Margin Financiers CDS house account In Blocked Status Proprietary MF Transaction will be settled in the Broker Margin Financiers CDS house account In Blocked Status and Non-proprietary transactions will be settled in the respective CDS sub-accounts of a client in Blocked Status  

Recommendations of the Committee Particular Previous Revised 6. Pledging of Margin Financed Securities Pledging of Margin Financed Securities delivered in the Blocked Account of Financier was restricted Broker Margin Financier will be allowed to pledge Margin Finance Securities: From the CDS sub-account of a client maintained in the Blocked Status Pledging shall be made through exclusive pledge ID Pledging can only be made in favor of Bank for which tri-partite agreement is executed. Client shall be identified to Bank.

Recommendations of the Committee Particular Previous Revised 7. Pledging of Securities from Normal sub-account of Client Pledging of Securities from normal sub-account of a client was permissible as per the terms and conditions of bank Broker Margin Financier will be allowed to pledge securities from the normal CDS sub-account of a client: Open Position of client should exist in MF. Pledging shall be made through exclusive pledge ID Pledging can only be made in favor of Bank for which tri-partite agreement is executed. Client shall be identified to Bank. Pledging should not exceed with the requirements.

Recommendations of the Committee Particular Previous Revised 8. Margins/MTM Losses on Pledged Position N/A Where Margin Financed Securities are pledged in such case: Broker Margin Financier will be required to deposit VaR Margins and MTM Losses Margins/MTM Losses to be deposited from the house account of Broker Margin Financier . Such securities should be maintained in the separate blocked account of Broker Margin Financier.

Recommendations of the Committee Particular Previous Revised 9. Pledge Call Reporting Banks can make a pledge call in case of shortfall in margins Broker Margin Financier shall be required to provide a report to bank identifying relevant client and securities against which securities required to pledge call. Bank will give priority to the accounts and securities identified by the Broker Margin Financier Bank will pledge call shares to the extent of default Terms and conditions should be covered in tri-partite agreement

Recommendations of the Committee Particular Previous Revised 10. Corporate Entitlements Corporate entitlements of Margin Financed Securitas are delivered to the Margin Financier who settle such entitlement with Financee as per terms and conditions on MF Agreement Corporate entitlements of Margin Financed Securitas will be delivered to the respective client/ proprietary account as the case may be as per mechanism applicable in MTS

MFN Initiation Screen (Trade date and settlement date)

MF RMS Summary Report

MF RMS Detail Report

MF Security Collateral Deposit Screen

MF Security Collateral Deposit Screen

MF Security Collateral Release Screen

MF Security Collateral Release Screen

Pledge Call Intimation Screen

Pledge Call Intimation Report

Pledge Exception Report

Thank You! National Clearing Company of Pakistan Limited 8th Floor, Pakistan Stock Exchange Building, Stock Exchange Road, Karachi – 74000 Pakistan TEL : (92-21) 32460811-19 FAX: (92-21) 32460827 E-Mail : rehansaif@nccpl.com.pk Website : http://www.nccpl.com.pk