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Культура Документы
2009
Stock Exchange
Its operations & functions
This document include a detail about the stock exchange its
functions and operations, including the major stock exchange of
the world and Pakistan
Stock
Exchange
Contents
1. Over view of market
2.
. pg.03
pg.16
pg.21
pg.23
Karachi stock exchange (K.S.E). pg.24
Lahore stock exchange (L.S.E) pg.30
Islamabad stock exchange (I.S.E) pg.32
Stock
Exchange
Infra
Infrastructure
structure
Financial
Financialmarket
market
Money
Moneymarket
market
Capital
Capitalmarket
market
Security
Securitymarket
market
Non
Nonsecurity
security
market
market
Stock
Stock
exchanges
exchanges
Clearing
Clearing&&
settlement
settlement
Education
Education
&&training
training
Investor
Investor
productor
productor
Rating
Rating
agency
agency
Stock
Exchange
A public place where buyers and sellers make transactions, directly or via intermediaries.
Also sometimes means the stock market.
A market is a public place where provision and object are exposed for sale.
Money Market
Capital Market
Money Market:In finance, the money market is the global financial market for short-term
borrowing and lending. It provides short-term liquidity funding for the global financial system.
The money market is where short-term obligations such as Treasury bills, commercial paper and
bankers' acceptances are bought and sold.
Capital Market:It is defined as a market in which money is provided for periods longer than a year as
the raising of short-term funds takes place on other markets (e.g., the money market). The capital
market includes the stock market (equity securities) and the bond market (debt).
an auction,
a private electronic market,
a shopping center,
Markets of varying types can spontaneously arise whenever a party has interest in a good or
service that some other party can provide. Hence there can be a market for cigarettes in
correctional facilities, another for chewing gum in a playground, and yet another for contracts for
the future delivery of a commodity. There can be black markets, where a good is exchanged
Stock
Exchange
illegally and virtual markets, such as eBay, in which buyers and sellers do not physically interact
during negotiation. There can also be markets for goods under a command economy despite
pressure to repress them.
2. Stock exchange
Stock
Stockexchange
exchange
Introduction
Introduction
Role
Role
History
History
Listing
Listingofofsecurities
securities
Securities
Securities
Owner
Ownerships
ships
Types
Typesofofoperators
operators
Future
Future
Trading
Tradingprocess
process
Types
Types
Stock
Exchange
1. Introduction:
A stock exchange is an organization of which the members are stock brokers. A stock
exchange provides facilities for the trading of securities and other financial instruments.
Usually facilities are also provided for the issue and redemption of securities as well as
other capital events including the payment of income and dividends. The securities
usually traded on a stock exchange include the shares issued by companies, unit trusts
and other pooled investment products as well as corporate bonds and government bonds.
In the middle of the 13th century, Venetian bankers began to trade in government
securities. In 1351, the Venetian Government outlawed spreading rumors intended to
Stock
Exchange
lower the price of government funds. There were people in Pisa, Verona, Genoa and
Florence who also began trading in government securities during the 14th century. This
was only possible because these were independent city states ruled by a council of
influential citizens, not by a duke.
The Dutch later started joint stock companies, which let shareholders invest in business
ventures and get a share of their profitsor losses. In 1602, the Dutch East India
Company issued the first shares on the Amsterdam Stock Exchange. It was the first
company to issue stocks and bonds. In 1688, the trading of stocks began on a stock
exchange in London.
On May 17, 1792, twenty-four supply brokers signed the Buttonwood Agreement
outside 68 Wall Street in New York underneath a buttonwood tree. On March 8, 1817,
properties got renamed to New York Stock & Exchange Board. In the 19th century,
exchanges (generally famous as futures exchanges) got substantiated to trade futures
contracts and then choices contracts. There are now a large number of stock exchanges in
the world.
Bonds.
Stock
Exchange
Shares:The total authorized capital in the company is divided into small units and each is
individually called Share. You can buy large or small lots to match the amount of money
you want to invest. When the company does well, its shares can rise in value. If the
company hits a bad patch, its share can fall in value. The shares are considered as the main
source to raise companys capital.
Share Holder:The people who provide finance to company by purchasing shares are called
shareholders.
Types of shares:1.
Preference Shares:
These are shares whose holders have preferential rights in respect of the payment of
dividend and repayment of capital in the event of winding up. The rate of dividend on these
shares is fixed. There are further two types of preference shares.
Cumulative preference shares: If the profit if company is not enough to pay dividend on
any kind of shares at the end of financial year than the right of dividend on these shares
accumulates until all arrears of unpaid dividend have been paid.
Non-Cumulative preference shares: These are the shares on which if dividend is not paid
out of current years profit in any year then it is never paid.
2.
Ordinary Shares:
These shares are the shares on which dividend is not paid at fixed rate. Ordinary
shareholders receive the dividend proportionally out of profit earned by the company after
the payment of fixed dividend on preference shares.
3.
Deferred Shares:
The share issued to promoters of the company is called deferred or founders shares. The
dividend on these shares is paid after the payment of dividend on all other types of shares.
Stock
Exchange
A broker is a member of the stock exchange. He buys and sells the securities on the behalf
of the outsiders who are not the members. He charges brokerage for his services. He does
not specialize in any particular security. He buys sells all types of securities according to
the orders placed by his clients.
2. Jobbers:
The jobber is a member of stock exchange but he buys and sells securities on his own
behalf. He is a dealer in securities. He usually specializes in one type of security. His
income comes from the profit or price difference in the purchase and sale of securities. A
jobber normally deals for himself but he is not prohibited from buying and selling
securities on the behalf of others.
3. Bulls:
A bull is a speculator who expects a rise in prices. Therefore, he buys securities with a view
to sell them in future at a higher price thereby make profit. When the conditions in the
stock exchange are dominated by bulls, it is called a bullish market. When the prices fall
and bulls have to sell at loss, it is called bull liquidation.
4. Bears:
A bear is a speculator expects fall in prices. Therefore, he sells securities for future
delivery. He sells securities, which he does not possess. He sells with the hope to buy the
securities at lower price before the date of delivery. The efforts of bears to bring down the
prices artificially are known as bear raids. When bears dominate the market, it is called a
bearish market. When prices are rise and bears have to make purchases to meet their
commitments, it is called bear covering.
Selection of Broker:
A broker is a member of stock exchange and securities can only be purchased and sold
through him. After selecting the broker the investor has to convince the broker to buy or
sell securities on his behalf. For this purpose, the investor may have to make an advance or
give references of a bank or some other persons.
2.
Stock
Exchange
The Client
The Jobber
The stock broker simply acts as agent and contacts the particular jobber in the stock
exchange on behalf of the client. He does not disclose to the jobber whether he is a buyer or
seller of shares. He therefore, asks him to quote two prices:
I. The upper prices at which he is ready to sell the shares.
II. The lower prices at which he is ready to buy the shares.
For Example, Mr. Ali wants to sell one thousand shares of a Company. He contacts a broker
dealing on the stock exchange. The broker asks a jobber to give quotations. He does not
disclose the jobber whether he wants buy or sell the shares of a company. The jobber gives
two prices, one at which he is willing to sell and the other at which he is ready to buy. For
instance, the two quoted prices are Rs.21.90 and Rs.22.00 in a thousand. This means broker
is willing to purchase at Rs.21.90 and sell at Rs.22.00 per share. If the broker is not
satisfied, he can go to another jobber or ask the first one to make it closer (i.e. to reduce the
margin between buying and selling). If the broker is satisfied with the new quotation, he
then contacts with his client informs him the bid of the share. If the client agrees to the bid
price, then bargain is struck
3.
The stock broker prepares a contact note, one copy of which is given to the client; second
one to the jobber and the third remains with the broker. The contact note generally contains
the following information:
Name and the address of the stockbroker.
The name and address of the jobber.
The type and price of the share.
The commission of the broker.
The date of transaction
4.
Settlement:
In case of ready delivery contract, the buyer pays the money and the seller delivers
the securities one same day.
In the case of forward delivery contracts settlements are done in a week or once in a
month.
10
Stock
Exchange
On the settlement day, the difference in the purchase and the sell price may be paid without
any delivery of securities. The parties may also postpone the deal to the next settlement
date through mutual consent. This is known as carryover or budla.
5. Corporate governance:
By having a wide and varied scope of owners, companies generally tend to improve on
their management standards and efficiency in order to satisfy the demands of these
shareholders and the more stringent rules for public corporations imposed by public stock
exchanges and the government. Consequently, it is alleged that public companies
(companies that are owned by shareholders who are members of the general public and
trade shares on public exchanges) tend to have better management records than privatelyheld companies (those companies where shares are not publicly traded, often owned by the
11
Stock
Exchange
company founders and/or their families and heirs, or otherwise by a small group of
investors). However, some well-documented cases are known where it is alleged that there
has been considerable slippage in corporate governance on the part of some public
companies. The dot-com bubbles in the early 2000s, and the subprime mortgage crisis in
2007-08, are classical examples of corporate mismanagement. Companies like Pets.com
(2000), Enron corporation (2001), One.Tel (2001), Sunbeam (2001), Webvan (2001),
Adelphia (2002), MCI WorldCom (2002), Parmlat (2003), American International Group
(2008), Lehman Brothers (2008), and Satyam Computer Services (2009) were among the
most widely scrutinized by the media.
9. Regulation of companies:
The stock exchange exercises a wholesome influence on the management of companies. A
company that wants to be listed on stock exchange must bind itself to the rules and
regulations prescribed by the stock exchange.
12
Stock
Exchange
Stock exchange provides employment opportunities to the jobbers and other members who
perform there activities in the stock exchange. So it is an important source of employment
not only for investors but also for the members and there employees.
4)
5)
6)
7)
After the scrutiny of application, if the stock exchange authorities are satisfied, they call
upon the company to execute the listing agreement. The listing agreement contains the
following conditions and obligations:
1) The company must be fair to all the applicants for shares. In the case of over
subscription, no undue preference will be shown to any particular class of applicants.
2) To notify stock exchange about the date of the board meeting at which decision of
dividend is taken.
3)
To forward the copies of its annual accounts duly audited to the stock exchange.
4) To notify the stock exchange, about any material change or nature or feature of the
companys business.
5)
To notify the stock exchange any change in the capital of the company.
6)
13
Stock
Exchange
7) To comply with all the requirements of the listing agreement and not to commit any
breach of any condition.
8) To notify the stock exchange of any occasion this will result in redemption or
cancellation of any listed security.
9)
10) To supply the stock exchange any other information necessary to enable the
shareholders to know about the companys position.
14
Stock
Exchange
and days later buying the same amount of shares, but maybe 15 % cheaper, so these shares
could be handed to their buyers, thereby making the market fall deeply.
William Lupine, founder of the Instinet trading system and the Optima system, has been
quoted as saying "I'd definitely say the ECNs are winning... Things happen awfully fast
once you reach the tipping point. We're now at the tipping point."
One example of improved efficiency of ECNs is the prevention of front running, by which
manual Wall Street traders use knowledge of a customer's incoming order to place their
own orders so as to benefit from the perceived change to market direction that the
introduction of a large order will cause. By executing large trades at lightning speed
without manual intervention, ECNs make impossible this illegal practice, for which several
NYSE floor brokers were investigated and severely fined in recent years Under the
specialist system, when the market sees a large trade in a name, other buyers are
immediately able to look to see how big the trader is in the name, and make inferences
about why s/he is selling or buying. All traders who are quick enough are able to use that
information to anticipate price movements.
ECNs have changed ordinary stock transaction processing (like brokerage services before
them) into a commodity-type business. ECNs could regulate the fairness of initial public
offerings (IPOs), oversee Hambrecht's Open IPO process, or measure the effectiveness of
securities research and use transaction fees to subsidize small- and mid-cap research
efforts.
However, believe the answer will be some combination of the best of technology and
"upstairs trading" in other words, a hybrid model.
Trading 25,000 shares of General Electric stock (recent quote: $7.54; recent volume:
216,266,000) would be a relatively simple e-commerce transaction; trading 100 shares of
Berkshire Hathaway Class A stock (recent quote: $72,625.00; recent volume: 877) may
never be. The choice of system should be clear (but always that of the trader), based on the
characteristics of the security to be traded.
Even with ECNs forming an important part of a national market system, opportunities
presumably remain to profit from the spread between the bid and offer price. That is
especially true for investment managers that direct huge trading volume, and own a stake in
an ECN or specialist firm. For example, in its individual stock-brokerage accounts,
"Fidelity Investments runs 29% of its undesignated orders in NYSE-listed stocks, and 37%
of its undesignated market orders through the Boston Stock Exchange, where an affiliate
controls a specialist post."
15
Stock
Exchange
3.
Function
FunctionofofSE
SE
Main
Mainactivities
activities
Function
Functionasas
An
Anorganization
organization
InInfavor
favorofofinvestor
investor
InInfavor
favorofofcompanies
companies
16
Stock
Exchange
To promote the savings and for them to be canalized towards of carrying through
investment projects that otherwise wouldnt be possible you need that the issuing
institution of the securities to be admitted for quoting. The negotiations will be
done on the primary market.
To provide liquidity to the investors. The investor can recuperate the money
invested when needed. For it, he has to go to the stock exchange market to sell the
securities previously acquired. This function of the stock market is done on the
secondary market.
To provide official information about the quantities that are negotiated and of the
quoted prices.
To fix the prices of the securities according to the fundamental law of the offer
and the demand.
Specifying a bit more and centering on the two main agents that intervene in the market,
investors and companies, we could do the following classification:
3. Functions in favor of the investor:
17
Stock
Exchange
It permits him the access to the profitable activities of the big companies.
It permits for the investor to have a political power in the companies in which he
invests its savings due that the acquisition of ordinary shares gives him the right
(among other things) to vote in the general shareholders meetings of the company
in question.
It supplies them with the obtaining of long-term funds that permits the company
to make profitable activities or to do determine projects that otherwise wouldnt
be possible to develop for lack of financing. Also, this funding signifies a less cost
than if obtained at other channels.
The securities quoted at the stock exchange market usually have more fiscal
purpose advantages for the companies.
It offers to the companys free publicity, which in other way would suppose
considerable expenses. The institution is objecting of attention of the media
(television, radio, etc.) in case any important change in its owners (the share
holders).
First of all, they need of a series of conditions to be apt to enter to the quotations, not all
the companies that apply can do it.
The issuing of shares may suppose a loss of power for the founders of the company.
Anyway, this is very relative because it will depend on the grade of atomization on the
18
Stock
Exchange
participations of the new shareholders and of the percentage of shares that the founders
keep over the total capital of the company.
If for example a 49% of the share capital is in hands of the founders, these could loose
the control of in case the other 51% would be in hands of one main shareholder.
However, this rarely happens, due that the share capital that usually goes to the stock
market tends to be distributed between a great number of shareholders that acquire
modest participations in respect to that of the capital of the company the founders may
still keep control with share capital is distributed between a great number of participants.
Now then, the property of these shares implies the possession of certain rights over the
company in which you participate.
These are: political rights, among which appears the possibility of participating in the general
share holders meetings and in the administration of the company by means of the execution of
your rights to vote; and the economic right, which embraces the possibility of receiving
dividends, preferential rights of subscription, the transmission of shares (selling) and the right to
the liquidity value.
This last implies that at the moment in which the company is liquidated, what remains is
proportionally divided between the shareholders.
5. The possession of all these rights is what reduces the power of the founders.
The shares may pass to be property of unknown people to the founders. At the moment in
which they are object of quotations at the stock exchange market any supplier of capital
may have them. If its a company that previously knew all its shareholders, considering
this as an asset of value to the company. The stock market quotation may generate an
important change that will not always be positive.
The companies that are quoted at the stock market offer a better transparency, in a way
that the general public may have access to any information related to their evolution and
activities.
This makes them have a greater control and to supervise every movement done.
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Stock
Exchange
World
Worldmajor
majorSE
SE
Regions
Regions
America
America
Africa
Africa
Asia
Asia
Europe
Europe
20
Stock
Exchange
Twenty Major Stock Exchanges In The World: Market Capitalization & Year-to-date Total
Turnover at the end of August 2009
Region
Stock Exchange
Market Value
(millions
USD)
Total Share
Turnover
(millions USD)
Africa
690,797.5
210,180.8
Americas
NASDAQ
2,847,535.2
19,343,868.3
Americas
1,032,518.4
361,959.0
Americas
1,432,877.0
798,193.1
Americas
10,842,001.9
12,158,620.6
AsiaPacific
1,066,513.2
560,912.8
AsiaPacific
1,082,572.0
171,176.2
AsiaPacific
1,945,517.7
970,227.6
AsiaPacific
Korea Exchange
727,125.3
1,050,473.8
Asia-
1,019,109.0
506,652.3
21
Stock
Exchange
Pacific
AsiaPacific
2,142,756.8
3,315,768.5
AsiaPacific
596,320.2
1,701,256.8
AsiaPacific
3,478,602.5
2,675,983.3
Europe
Euro next
2,605,097.6
1,195,962.2
Europe
1,204,292.0
1,589,736.7
Europe
2,560,491.1
2,321,518.5
Europe
1,178,525.6
1,040,751.1
Europe
636,674.8
565,759.3
Europe
781,146.3
503,049.9
Europe
Swiss Exchange
992,356.4
520,867.5
22
Stock
Exchange
Pakistan
Pakistanstock
stock
exchange
exchange
Karachi
Karachistock
stock
exchange
exchange(KSE)
(KSE)
Lahore
Lahorestock
stock
exchange
exchange(LSE)
(LSE)
Islamabad
Islamabadstock
stock
exchange
exchange(ISE)
(ISE)
23
Stock
Exchange
1.
The Karachi Stock Exchange or KSE is the first stock exchange located in Karachi,
Sindh, Pakistan Founded in 1947; it is Pakistan's largest and oldest stock exchange, with many
Pakistani as well as overseas listings. Its current premises are situated on Stock Exchange Road,
in the heart of Karachi's Business District. Later on two more stock exchanges were formed in
Lahore (1971) and Islamabad (1992) to facilitate the investment in securities. The investors get
opportunities of international investment due to contract of Pakistans stock exchanges with other
countries. The stock exchange not only informs the investors about international business trends
but also plays important role in strengthening the economy of the country.
History:The KSE is the first stock exchange located in Karachi, Sindh, Pakistan Founded in 1947;
it is Pakistan's largest and oldest stock exchange, with many Pakistani as well as overseas
listings. Its current premises are situated on Stock Exchange Road, in the heart of Karachi's
Business District.
24
Stock
Exchange
Growth:The KSE is the biggest and most liquid exchange in Pakistan and in 2002, it was declared
as the Best Performing Stock Market of the World. As of December 20, 2007, 671 companies
were listed with the market capitalization of Rs. 4364.312 billion (US$ 73 Billion) having listed
capital of Rs. 717.3 billion (US$ 12 billion). On December 26, 2007, the KSE 100 Index reached
its ever highest value and closed at 14,814.85 points.
Foreign buying interest had been very active on the KSE in 2006 and continued in 2007.
According to estimates from the State Bank of Pakistan, foreign investment in capital markets
total about US$523 Million. According to a research analyst in Pakistan, around 20pc of the total
free float in KSE-30 Index is held by foreign participants.
KSE has seen some fluctuations since the start of 2008. One reason could be that it is the
election year in Pakistan, and stocks are expected to remain dull. KSE has set an all time high of
15,000 points, before settling around the 14,000 mark.
Karachi stock exchange Board Of Directors (2007) announced plans to construct a 40
story high rise KSE building, as a new direction for future investment.
Disputes between investors and members of the Exchange are resolved through
deliberations of the Arbitration Committee of the Exchange.
KSE began with a 50 shares index. As the market grew a representative index was
needed. On November 1st, 91 the KSE-100 was introduced and remains to this day the most
generally accepted measure of the Exchange. Karachi Stock Exchange 100 Index (KSE-100
Index) is a benchmark used to compare prices overtime, companies with the highest market
capitalization are selected. To ensure full market representation, the company with the highest
market capitalization from each sector is also included.
In 1995 the need was felt for an all share index to reconfirm the KSE-100 and also to
provide the basis of index trading in future. On August the 29th, 1995 the KSE all share index
was constructed and introduced on September, 18, 1995.
April 20:-
May 23:-
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Stock
Exchange
Record high inflation in the month of May, 2008 resulted in the unexpected increase
in the interest rates by State Bank of Pakistan which eventually resulted in sharp fall in
Karachi Stock Exchange.
July 17 :-
Angry investors attacked the Karachi Stock Exchange in protest at plunging Pakistani
share prices.
July 16 :-
KSE-100 Index dropped one-third from an all-time high hit in April, 2008 as rising
pressure on shaky Pakistan's coalition government to tackle Taliban militants exacerbates
concern about the country's economic woes.
August 18:-
KSE 100 Index rose more than 4% after the announcement of the resignation of
President Pervez Musharaf but Credit Suisse Group said that Pakistan's Post-Musharaf rally
in Stock Exchange will be short-lived because of a rising fiscal deficit and runaway inflation.
August 28 :-
Karachi Stock Exchange set a floor for stock prices to halt a plunge that has wiped out
$36.9 billion of market value since April.
December 15:-
Trading resumes after the removal of floor on stock prices that was set on August 28
to halt sharp falls.
KSE Stock indices: Stock indices:A stock index is a method of measuring a section of the stock market.
There are two big indices used in Karachi Stock Exchange.
KSE 100 Index
Karachi Stock Exchange 100 Index (KSE-100 Index) is a stock index, acting as a
benchmark to compare prices on the Karachi Stock Exchange (KSE) over a period of time. In
determining representative companies to compute the index on, companies with the highest
market capitalization are selected. However, to ensure full market representation, the company
with the highest market capitalization from each sector is also included.
26
Stock
Exchange
History:The index was launched in late 1991 with a base of 1,000 points. By 2001, it had grown
to 1,770 points. By 2005, it had skyrocketed to 9,989 points. It then reached a peak of 12,285 in
February 2007. KSE-100 index touched the highest ever benchmark of 14,814 points on
December 26, 2007, a day before the assassination of former Prime Minister Benazir Bhutto,
when the index nosedived. The index recovered quickly in 2008, reaching new highs near 15,500
in April. However, by November 22, 2008 during the global financial crisis of 2008, it had fallen
to 9,187.
Top 30 KSE 100 Index companies:The following is a list of 30 companies with the highest market capitalization volume and
their respective weight ages in the index and account for over 80% of the KSE index as of
February 20, 2008:
Number
Company Name
OGDCL
14.14
550,948,930,000
MCB
7.17
279,583,150,000
5.43
211,726,900,000
Pakistan Petroleum
5.06
197,201,080,000
4.41
171,704,800,000
PTCL
4.28
166,810,800,000
4.13
161,025,160,000
103,600,000,000
2.08
81,034,440,000
10
2.01
78,371,670,000
11
Nestle Pakistan
1.93
75,280,250,000
12
Pakistan Oilfields
1.71
66,824,220,000
13
1.68
65,607,390,000
14
ABN AMRO
1.63
63,666,370,000.
15
Engro Chemical
1.45
56,492,990,000
16
1.40
54,660,000,000
17
NIB Bank
1.27
49,320,250,000
27
Stock
Exchange
18
1.19
46,565,400,000
19
1.16
45,300,000,000
20
Bank Of Punjab
1.13
43,869,030,000
21
1.06
41,474,480,000
22
Bank Alfalfa
1.03
39,975,000,000
23
1.01
39,258,300,000
24
0.99
38,707,280,000
25
0.98
38,300,100,000
26
0.98
38,128,240,000
27
35,549,620,000
28
0.91
35,354,280,000
29
0.89
34,750,000,000
30
Lucky Cement
0.86
33,593,480,000
KSE-30 Index:
The Karachi Stock Exchange has launched the KSE-30 Index with base
value of 10,000 points, formally implemented from Friday, September 1, 2006. The main
feature of this index that makes it different from other indices are:
KSE-30 index is based only on the free-float of shares, rather than on the basis of paid-up
capital.
The other index in Karachi Stock Exchange represents total return of the market. That is,
when a company announces a dividend, the other indices at KSE are not reduced/adjusted
for that amount of dividend (whether cash or bonus).Whereas, KSE-30 Index is adjusted
for dividends and right shares.
At the end of 13 July, 2007, KSE-30 Index has reached its highest ever level of
17,162.45.
Market Indices:KSE began with a 50 shares index. As the market grew a representative index was
needed. On November 1, 1991 the KSE-100 was introduced and remains to this date the most
generally accepted measure of the Exchange. The KSE-100 is a capital weighted index and
consists of 100 companies representing about 90 percent of market capitalization of the
Exchange. In 1995 the need was felt for an all share index to reconfirm the KSE-100 and also to
28
Stock
Exchange
provide the basis of index trading in future. On August 29,1995 the KSE all share index was
constructed and introduced on September 18, 1995.
Monthly Performance:Market monthly performance during the period January 2006 to April 2009 is given under with
high rated index showing in bold text. The highest ever closing for KSE 100 Index was achieved
at 15,676.34 points on 18 April, 2008.
Following a staggering loss of 42 per cent in four months (April 2008 to August 2008),
the regulators had put planks under the KSE-100 index at 9,144 points on August 28, 2008 to
prevent a further fall. The floor was finally removed on December 15, 2008 that had brought the
bourse to a virtual halt for more than 100 days.
Number
Volume
Index
Date
402,639,040 9,672.47
02/01/2006
152,448,096 9,603.71
10
11
12
13
39,200,120
14
15
16
73,447,224
03/07/2006
10,066.68 03/01/2007
11,277.13 02/04/2007
29
Stock
Exchange
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
60,751,820
12,221.53 01/07/2008
32
72,835,000
10,171.39 01/08/2008
32
23,691,000
9,210.15
01/09/2008
34
1,560,000
9,178.97
06/10/2008
35
457,000
9,183.14
03/11/2008
36
102,000
9,187.10
01/12/2008
37
75,434,000
5,753.18
01/01/2009
38
177,668,000 5,333.95
02/02/2009
39
85,351,000
5,681.29
02/03/2009
40
207,282,000 6,931.90
01/04/2009
41
123,539,000 7,062.25
04/05/2009
30
Stock
Exchange
Lahore Stock Exchange (Guarantee) Limited is Pakistan's second largest stock exchange after the
Karachi Stock Exchange. It is located Lahore, Pakistan.
History of LSE:Lahore Stock Exchange was established in October 1970 and is the second largest
stock exchange in the country with a market share of around 12-16% in terms of daily traded
volumes. LSE has 519 companies, spanning 37 sectors of the economy, that are listed on the
Exchange with total listed capital of Rs. 555.67 billion having market capitalization of around
Rs. 3.64 trillion. LSE has 152 members of whom 81 are corporate and 54 are individual
members.
Activities of Lahore Stock Exchange (LSE) have increased significantly in all operational areas
since its inception. Over the years, LSE has successfully met various challenges and has now
emerged, fully geared and positioned to aggressively compete with its fellow Exchanges,
contributing towards the growth of Capital Markets in Pakistan.
The LSE was the first stock exchange in Pakistan to use the internet and currently 50% of its
transactions are via the internet.
The Lahore Stock Exchange has opened branches in the industrial cities of Faisalabad and
Sialkot for trading. The Sialkot branch is referred to as the "Sialkot Trading Floor".
LSE Index
LSE-25:
The Lahore Stock Exchange Twenty Five company index also calculates the performance of
stocks assuming that all rights issues and bonus share issues only increase the listed capital. In
the case of bonuses or rights the prices of the shares are not adjusted as they are in the case of the
LSETRI. However, the LSE25 assumes that dividends paid out by a component company are not
reinvested. In summary, in the LSE25, no price adjustments are made when any component
company issues cash dividends.
The Lahore Stock Exchange Total Return Index calculates the performance of stocks assuming
that all payouts are reinvested in the index on the ex-date. The LSETRI assumes that if a
component company issues bonus shares or announces a rights issue it will increase the listed
capital. Additionally, the LSETRI also assumes that all pay-outs by a component company are
100% reinvested in the index. Therefore, the LSETRI is adjusted against such payouts
announced by any of index constituents on its ex-date allowing the index value to remain
comparable over time.
LSE's Membership Structure
Year
Private Limited
Companies
Corporate Members
Public Limited
Companies
Banks or their
Subsidiaries
Individual
Total
Members
31
Stock
Exchange
2000
2001
2002
2003
2004
2005
2006
2007
26
26
26
26
44
26
22
24
3
6
5
6
4
7
6
5
6
5
6
4
5
5
7
4
3
3
3
3
3
3
3
3
118
118
118
118
118
118
118
118
118
118
118
118
118
118
118
118
Ultimate Support and Assistance of web VOT & TWS for People at their locality.
32
Stock
Exchange
The Islamabad Stock Exchange (ISE) was incorporated as a guarantee limited Company on 25th
October, 1989 in Islamabad Capital territory of Pakistan with the main object of setting up of a
trading and settlement infrastructure, information system, skilled resources, accessibility and a
fair and orderly market place that ranks with the best in the world. The purpose for establishment
of the stock exchange in Islamabad was to cater to the needs of less developed areas of the
northern part of Pakistan.
The ISE Towers comprise twin 22 storey towers with unique and inspiring amenities, offer
futuristically and aesthetically designed offices with panoramic views, is being constructed over
a piece of land measuring 5600 square yards in the heart of Islamabad at Jinnah Avenue (Blue
Area) which is the hub of all business and commercial activities in Islamabad. The building is
facing 400 feet wide Jinnah Avenue on one side and has another entrance from 100 feet wide
Nazimuddin Road, besides breathtaking scenic view of the Margalla Hills and the city from the
building.
At present there are 119 members out of which 93 are corporate bodies including commercial
and investment banks, DFIs and brokerage houses. The other 26 Members are individual persons
who are well educated, enterprising and progressive minded. The affairs of the Exchange are
governed by the Board of Directors. The Board of Directors consists of ten directors, of which
five are elected member directors and four are non-member directors nominated by the SECP
while the managing director by virtue of his office is the tenth director of the Board. In order to
protect the interest of the investing public, an Investors Protection fund has been established by
the Exchange.
Since the inception of automated trading system (ISECTS), the trade volume has been
multiplying day by day and the average daily turnover has now crossed the figure of 1 million
shares. Now all the listed securities are traded through the ISECTS. The system of physical
handling of shares and securities has been phased out and majority of the scrips are settled
through Central Depository Company of Pakistan Limited.
At the moment there are 241 companies/securities listed on the Exchange with an aggregate
capital of Rs. 389.512 billion. The market capitalization stood at Rs. 2,275.00 billion as on 0404-2007 . The pace of listing has remained slow as the economy of the Country is under
consistent pressure due to internal as well as external factors.
In comparison with major financial markets around the World, the functioning of capital market
in Pakistan is still very much in its infancy and lacks advanced technology.
33
Stock
Exchange
References:
Internet
Print media
Electronic media
34