⚠️ $325,000,000 in leveraged crypto long positions liquidated in…
⚠️ $325,000,000 in leveraged crypto long positions liquidated in just 30 minutes.
Pakistan Stock Exchange
What is the Margin Trading System (MTS) on PSX?
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Short answer
The Margin Trading System (MTS) and margin financing let PSX investors buy shares with partly borrowed money. They are run through the National Clearing Company of Pakistan (NCCPL): a financier funds part of the purchase, the shares are pledged as collateral, and the investor pays a mark-up usually linked to KIBOR. Leverage magnifies gains and losses, and falling prices can force sales. Most scholars consider interest-based margin financing impermissible.
How it works
- You buy eligible shares in the ready market, paying only part of the price as your margin.
- A financier (a broker or financial institution) funds the rest at an agreed participation ratio.
- The financed shares sit in a special pledged sub-account and cannot be sold freely.
- You pay a daily mark-up on the financed amount, typically KIBOR plus a spread.
- You repay the financing or sell the shares; if prices fall, you must add margin or the position is liquidated.
Only some shares qualify
NCCPL publishes the list of margin-eligible securities based on liquidity and risk; it has ranged from a few dozen shares upward. Riskier categories need higher margins. After an SECP task force reviewed the system, rules were tightened: financed shares must be held in separate sub-accounts and a margin financing agreement filed with CDC.
An example of the risk
In sharp market falls, many leveraged investors receive margin calls at the same time; forced selling then pushes prices lower still, which is why PSX crashes often accelerate.
| Without margin | With 50% financing | |
|---|---|---|
| Your money | Rs 500,000 | Rs 500,000 |
| Position size | Rs 500,000 | Rs 1,000,000 |
| Shares fall 20% | −Rs 100,000 (−20%) | −Rs 200,000 (−40%) plus mark-up |
| Shares rise 20% | +Rs 100,000 (+20%) | +Rs 200,000 (+40%) minus mark-up |
Costs to include
- Mark-up on financed amounts, charged daily and linked to KIBOR, which tracks the SBP policy rate (11.5% in late 2026).
- Brokerage, CDC and NCCPL fees on each trade.
- Capital gains tax on profits.
- The opportunity cost of being forced out at the worst time.
The Shariah position
Margin financing is a loan with interest (mark-up) tied to buying shares, which most scholars consider riba and impermissible, even when the shares themselves are Shariah-compliant. Islamic investors who want more exposure are usually advised to save and invest gradually rather than borrow.
Roman Urdu mein jawab
PSX par margin trading (MTS) kya hai?
MTS aur margin financing se PSX investor kuch udhaar paise se shares khareedte hain. NCCPL ke zariye financier khareedari ka hissa deta hai, shares girvi rehte hain aur KIBOR se jura mark-up dena hota hai. Leverage nafa aur nuqsan dono barhata hai aur girti market mein zabardasti farokht ho sakti hai. Aksar ulama sood wali margin financing ko na-jaiz kehte hain.
Frequently asked questions
Is margin trading allowed on PSX?
Yes, it is a regulated product through NCCPL under SECP rules, available on eligible shares through participating brokers and financiers.
What is a margin call?
A demand to add cash or securities when losses reduce your margin below the required level; if you do not, the financed shares can be sold.
How much does margin financing cost?
The mark-up is agreed with the financier and usually linked to KIBOR plus a spread, charged on the daily outstanding amount.
Is MTS halal?
Most scholars say no, because it involves borrowing with interest to buy shares.
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