The main exchange in Karachi responded sharply to the new rules

The move by the Karachi Stock Exchange's management means that brokerage houses will from 28 July have to deposit more shares as security against the positions they hold.

Brokers in Karachi routinely use borrowed money to finance their share dealing, continuing to pay daily interest without repaying the debt in a practice known as "badla".

But under the exchange's new way of valuing the deposited shares, the cost of using badla could go up as much as 25%.

In the short term, traders took the decision to sell up so as to make sure they met the new exposure limits, pushing the KSE down 3.5% or 129 points on Tuesday to close at 3,556.15, with almost seven times as many fallers as risers.

The previous five sessions had pushed the index to all-time highs, marking a gain of almost a third for the year so far.

New aid flows and US support, as well as plans to sell off state utilities, have driven the gains.

The change in the exchange rules, dealers said, could cut down on the volatility of trading on the exchange as brokers have to be less speculative about their trading.

"There are jitters for the time being," said Rony Byramjee, a dealer at HP Byramjee & Sons.