LAHORE STOCK EXCHANGE

Definitions/Concepts About Lahore Stock Exchange

Definitions/Concepts LSE Yesterday LSE Today LSE: The Road Ahead Corporatization, Demutualization & Integration(Report of Demutualization & Integration Committee) Definitions/Concepts Introduction of Committee Comments & Recommendations Problems of Stock Exchanges Commonly cited reasons Advantages Concerns after Demutualization

Stock Exchanges (Corporatization, Demutualization & Integration) Bill 2009

Proposed Plan Timeline Activities involved

International Experiences
Comparison from WFE members Significant International Cases Profits: Before and after The Case of Euronext

ABOUT LAHORE STOCK EXCHANGE (G) LIMITED

Stock Exchange:
As defined by Securities & Exchange Ordinance, 1969:

means any person who maintains or provides a market place or facilities for bringing together buyers and sellers of securities or for otherwise Performing with respect to securities the functions commonly performed by a Stock Exchange, as that term is generally understood, and includes such market place and facilities

(Guarantee) Limited:
As defined by Companies Ordinance, 1984:

means a company having the liability of its members limited by the memorandum to such amount as the members may respectively thereby undertake to contribute to the assets of the company in the event of its winding up

WHAT DOES A STOCK EXCHANGE DO?

y It is an organization that provides for the raising of capital / funding through securities and provides a platform where these securities can be traded. y Market for long term capital y Main Components
Primary market
Raises Capital for Companies

Secondary Market
Facilitates exchange of / liquidity in ownership

LSE Yesterday

1987
In order to boost the capital market in the province of Punjab, the Corporate Law Authority (CLA) imposed condition that companies would be listed at both LSE and KSE simultaneously. However this condition was removed in July 1991.

1992
LSE shifted to its new building. Corporate Members were allowed to become member of LSE.

1993
Central Depository Company of Pakistan Limited (CDC) was incorporated to manage and operate the Central Depository System (CDS).

1994
LSE embarked upon the computerization (automation) program.

 Pakistan Credit Rating Agency (PACRA), the first credit rating agency was established.

1995
LSE introduced T+3 settlement system. (previously T+5) Members Contribution Fund was established.

1996
LSE was the first Exchange in Pakistan to introduce automated trading.

1997
Asian Development Bank approved two loans totaling US$255 million for the Capital Markets Development Program. The process of restructuring of CLA was initiated.

 Investors established.

Protection

Fund

was

1998
First restructuring of LSE Board of Directors with induction of 5 outside Directors and appointment of independent Managing Director.

1999
The Securities and Exchange Commission of Pakistan (SECP) succeeded the CLA.
2001
LSE launch Internet Trading System (trading from terminals out of building). The National Clearing Company of Pakistan Limited (NCCPL) was incorporated to replace the separate and individual Clearing Houses operated by each of the three Pakistani Stock Exchanges.

2002
Pakistan s stock market was declared as the Best Performing Stock Market of

the World for the year 2002 by international magazine Business Week . Code of Corporate Governance was incorporated in the Listing Regulations. LSE implemented automated Trade Risk Filter (TRF) to monitor the members trading exposure on real time basis. Banks and financial institutions were allowed to become Associate Member of LSE Clearing House. Trading in Futures Contracts was introduced. LSE launched new LSE-25 Index replacing LSE-101 index.

2003
The size and composition of LSE Board of Directors was changed. The Board of Directors constituted 10 members, of whom 5 are elected members of the Exchange, 4 are non-members nominated by SECP, and a Managing Director, who is also non-Member. Surveillance Department was established at LSE.

 2004
The System Audit of LSE members introduced. Clearing and Settlement Operations of LSE were switched over to the National Clearing Company of Pakistan Limited. LSE opened first out stationed Trading Floor at Faisalabad.
2005
LSE opened second Trading Floor at Sialkot. LSE launched a series of investor education and awareness programs. Investigation & Enforcement Unit was setup to maintain a check on the market abuses (scope of Surveillance enhanced). The concept of Unique Identification Numbers was introduced

2006
LSE Training Institute was established MOU was signed with ISE for the establishment of Unified Trading Platform. The Finance Act 2006 included provisions for corporatization and

demutualization of Exchanges in Pakistan. The Demutualization Committee of the Exchange recommended to corporatize LSE. VaR based Margining Regime introduced

2007
LSE & ISE started joint trading on a common platform through Unified Trading System (UTS).

2008
ULTRA Trading Software was sold to Ghana Stock Exchange Cash Settled Future Contracts were launched

2009
Securities Lending & Borrowing Software was developed and sold Client Level Margining was implemented Debt Securities automated trading was launched

 Corporatization & Demutualization Act was passed by National Assembly