TREC Holders Contribution Fund (TCF) Trust
During the year 2012, in the first phase under the Stock Exchanges (Corporatization, Demutualization and Integration) Act, 2012 the stock exchanges were demutualized and became public companies and the brokers (earlier called members) were issued the shares of the public company (Lahore Stock Exchange Ltd.) along with the Trading Right Entitlement Certificates (TRECs). In March-2013, under the above referred Demutualization Act, while viewing the change of terminology of Members used for working brokers to TREC Holders, the Governing Board of Directors of erstwhile Lahore Stock Exchange Ltd. (LSE) established the Trading Right Entitlement Certificate (TREC) Holders Contribution Fund (TCF) Trust and accordingly, the Trust Deed of the TCF Trust with the approval of LSE Board of Directors and the SECP was executed and registered with the registrar concerned under Trust Act, 1882. Subsequently, the Trust was registered under the newly implemented ‘Punjab Trust Act, 2020’.
In the year 2015, under the second phase of the Stock Exchanges Act, 2012, the three stock exchanges were entered into the Scheme of Integration, which was executed by January 11, 2016 under the Integration Order (SECP Order No. 1/2016) of the Commission. The Commission issued the amended Stock Exchanges (Corporatization, Demutualization and Integration) Regulations, 2012 dated, December 17th, 2015.
Under these Regulations, the Commission constituted the Funds Committee for LSE (replacing LSE) in a supervisory role to oversight of the Trust Funds of LSE and also nominated Members of the Committee. The Trust Deeds of respective Trust Funds were amended as per direction of the Commission under the above referred Regulations. The Trust Deeds, included the terms and conditions, bylaws of the Trusts. The composition of the Trustees of respective Trust Funds was also amended as per the Regulations and the Commission also appointed the new Trustees of respective Trust Funds.
Role of SECP, Terms & Conditions of the Trust and Execution of Trust Deeds:
In the year 2015, in the second phase pursuant to the Stock Exchanges (Corporatization, Demutualization and Integration) Act, 2012 the stock exchanges were entered into the Scheme of Integration which was executed by January 11, 2016 under the Integration Order of the Commission and accordingly, Lahore Stock Exchange Ltd. ceased to be the stock exchange while converting into NBFC. In continuation of the Stock Exchanges Act, 2012 the Commission issued the amended Stock Exchanges (Corporatization, Demutualization and Integration) Regulations, 2012 dated, December 17th, 2015. Under Regulation No. 15 of these Regulations, the Commission constituted the Funds Committee (replacing LSE) for oversight of the Trust Funds of LSE and also nominated its members. The Commission also sent the amended Trust Deeds as per the amended Regulations for onward execution by the Trusts in which the composition of the Trustees is also mentioned. The Commission also granted its approval for the appointment of the new Trustees of these Trust Funds as per recommendation of the Funds Committee for LSE as per given composition in the Trust Deeds.
The Trust is entertaining all the claims of the cases against the defaulted Members/TREC holders of erstwhile LSE prior to the date of Integration i.e., January 11, 2016 as well as the claims against the Ex-TREC holders of erstwhile LSE inducted by Pakistan Stock Exchange (PSX) relating the post Integration period. Accordingly, in addition to bank guarantee provided by MCF Trust, to comply the requirement of Settlement Guarantee Fund of National Clearing Company of Pakistan Ltd. (NCCPL), TCF Trust has also provided bank guarantee to SGF (NCCPL).
Moreover, in consideration of continuity of business of the TREC holders, in addition to IPF Trust, the Commission has also permitted the TCF Trust for provision of bank guarantees to PSX against the Base Minimum Capital (BMC) requirement of all the Ex-TREC holders of erstwhile LSE inducted by PSX. BMC requirement is being calculated as per the BMC regulations of PSX (as per Chapter 19 of PSX Rule Book) and reviewed and updated on monthly basis on the basis of Assets under custody of each TREC holder.