24016453-Stock-exchange-its-functions-and-operations (1).doc

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Stock ExchangeIts operations & functions

This document include a detail about the stock exchange itsfunctions and operations, including the major stock exchange ofthe world and Pakistan

2009

Rabia Muzaffar AliBEIT-II

1/12/2009


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Contents

1. Over view of market . pg.03Types of financial market

Money market pg.04

Capital market pg.04Market infra structure

2. Stock exchange... pg.05 Introduction.. pg.06

History.. pg.06 Securities.. pg.07

Types of operation pg.08

Trading process in S.E.. pg.09

Role of S.E pg.10

Listing of securities in S.E pg.12

Ownership of S.E.. pg.14

Future of S.E. pg.14

Other types of S.E. pg.15

3. Functions of stock exchange. pg.16

4. World major S.E.. pg.21

5. Stock exchange of Pakistan.. 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


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1. Over view of market

Market

Financial market

Money market

Non securitymarket

Capital market

Security market

Stock

exchanges

Clearing &settlement

Education& training

Ratingagency

Investorproductor

Infra structure


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Over view of market

1. Market:- A public place where buyers and sellers make transactions, directly or viaintermediaries. Also sometimes means the stock market.

A market is a public place where provision and object are exposed for sale.

2. Types of Market:-There are two types of Market as following :

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 paperand 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). Thecapital market includes the stock market (equity securities) and the bond market (debt).

3.Organization of markets:-

A market can be organized as

an auction,

a private electronic market,

a commodity wholesale market,

a shopping center,

a complex institution such as a stock market,

An informal discussion between two individuals.

Markets of varying types can spontaneously arise whenever a party has interest in a good orservice that some other party can provide. Hence there can be a market for cigarettes in


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correctional facilities, another for chewing gum in a playground, and yet another for contractsfor the future delivery of a commodity. There can be black markets, where a good is exchangedillegally and virtual markets, such as eBay, in which buyers and sellers do not physicallyinteract during negotiation. There can also be markets for goods under a command economydespite pressure to repress them.

2. Stock exchange

Stock exchange

Introduction

Listing of securities

Trading process

Owner ships

History

FutureTypes of operators

Role

Types

Securities


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1. Introduction:-

A stock exchange, (formerly a securities exchange) is a corporation or mutualorganization which provides "trading" facilities forstock brokers and traders, to tradestocks and other securities. Stock exchange is a highly organized market wheresecurities are purchased and sold.

A stock exchange is an organization of which the members are stock brokers. A stockexchange provides facilities for the trading of securities and other financialinstruments. Usually facilities are also provided for the issue and redemption ofsecurities as well as other capital events including the payment of income anddividends. The securities usually traded on a stock exchange include the shares issuedby companies, unit trusts and other pooled investment products as well as corporatebonds and government bonds.

2. History of Stock Exchanges

In 11th century France the courtiers de changewas concerned with managing and regulating the debts of agricultural communities onbehalf of the banks. As these men also traded in debts, they could be called the first

brokers.

Some stories suggest that the origins of the term "bourse" come from the Latin bursameaning a bag because, in 13th centuryBruges, the sign of a purse (or perhaps threepurses), hung on the front of the house where merchants met. However, it is morelikely that in the late 13th century commoditytradersin Bruges gathered inside thehouse of a man called Van der Burse, and in 1309 they institutionalized this until nowinformal meeting and became the "Bruges Bourse". The idea spread quickly around
http://en.wikipedia.org/wiki/Stock_brokerhttp://en.wikipedia.org/wiki/Trader_(finance)http://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/Brokerhttp://en.wikipedia.org/wiki/Brugeshttp://en.wikipedia.org/wiki/Brugeshttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Traderhttp://en.wikipedia.org/wiki/Traderhttp://en.wikipedia.org/wiki/Traderhttp://en.wikipedia.org/wiki/Trader_(finance)http://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/Brokerhttp://en.wikipedia.org/wiki/Brugeshttp://en.wikipedia.org/wiki/Commodityhttp://en.wikipedia.org/wiki/Traderhttp://en.wikipedia.org/wiki/Stock_broker


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Flanders and neighboring counties and "Bourses" soon opened in Ghent andAmsterdam.

In the middle of the 13th century, Venetianbankers began to trade in governmentsecurities. In 1351, the Venetian Government outlawed spreading rumors intended tolower the price of government funds. There were people inPisa,Verona, GenoaandFlorence who also began trading in government securities during the 14th century.This was only possible because these were independent city states ruled by a councilof influential citizens, not by a duke.

The Dutch later startedjoint stock companies, which let shareholders invest inbusiness ventures and get a share of their profitsor losses. In 1602, the Dutch East

India Company issued the first shares on theAmsterdam Stock Exchange. It was thefirst company to issue stocksandbonds. In 1688, the trading of stocks began on a stockexchange in London.

On May 17, 1792, twenty-four supply brokers signed the Buttonwood Agreementoutside 68 Wall Street inNew Yorkunderneath a buttonwood tree. On March 8, 1817,properties got renamed to New York Stock & Exchange Board. In the 19th century,exchanges (generally famous asfutures exchanges) got substantiated to trade futurescontracts and then choices contracts. There are now a large number of stock exchanges

in the world.

3. Securities:-

The securities traded on a stock exchange include:

Shares issued by companies.

Debentures.

Bonds.

To be able to trade a security on a certain stock exchange, it has to be listed there.Usually there is a central location at least for recordkeeping, but trade is less and lesslinked to such a physical place, as modern markets are electronics networks, whichgives them advantages of speed and cost of transactions. Trade on an exchange is bymembers only. The initial offering of stocks and bonds toinvestors is by definitiondone in the primary market and subsequent trading is done in the secondary market.

A stock exchange is often the most important component of a stock market.
http://en.wikipedia.org/wiki/Flandershttp://en.wikipedia.org/wiki/Ghenthttp://en.wikipedia.org/wiki/Amsterdamhttp://en.wikipedia.org/wiki/Venicehttp://en.wikipedia.org/wiki/Venicehttp://en.wikipedia.org/wiki/Pisahttp://en.wikipedia.org/wiki/Pisahttp://en.wikipedia.org/wiki/Veronahttp://en.wikipedia.org/wiki/Veronahttp://en.wikipedia.org/wiki/Genoahttp://en.wikipedia.org/wiki/Genoahttp://en.wikipedia.org/wiki/Florencehttp://en.wikipedia.org/wiki/Joint_stock_companyhttp://en.wikipedia.org/wiki/Shareholderhttp://en.wikipedia.org/wiki/Dutch_East_India_Companyhttp://en.wikipedia.org/wiki/Dutch_East_India_Companyhttp://en.wikipedia.org/wiki/Amsterdam_Stock_Exchangehttp://en.wikipedia.org/wiki/Amsterdam_Stock_Exchangehttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Londonhttp://en.wikipedia.org/wiki/New_Yorkhttp://en.wikipedia.org/wiki/Futures_exchangehttp://en.wikipedia.org/wiki/Futures_exchangehttp://en.wikipedia.org/wiki/Shareshttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Investorhttp://en.wikipedia.org/wiki/Investorhttp://en.wikipedia.org/wiki/Flandershttp://en.wikipedia.org/wiki/Ghenthttp://en.wikipedia.org/wiki/Amsterdamhttp://en.wikipedia.org/wiki/Venicehttp://en.wikipedia.org/wiki/Pisahttp://en.wikipedia.org/wiki/Veronahttp://en.wikipedia.org/wiki/Genoahttp://en.wikipedia.org/wiki/Florencehttp://en.wikipedia.org/wiki/Joint_stock_companyhttp://en.wikipedia.org/wiki/Shareholderhttp://en.wikipedia.org/wiki/Dutch_East_India_Companyhttp://en.wikipedia.org/wiki/Dutch_East_India_Companyhttp://en.wikipedia.org/wiki/Amsterdam_Stock_Exchangehttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Londonhttp://en.wikipedia.org/wiki/New_Yorkhttp://en.wikipedia.org/wiki/Futures_exchangehttp://en.wikipedia.org/wiki/Shareshttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Investor


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Supply and demand in stock markets is driven by various factors which, as in all freemarkets, affect the price of stocks.

There is usually no compulsion to issue stock via the stock exchange itself, nor muststock be subsequently traded on the exchange. Such trading is said to be off exchange

or over the counter. This is the usual way that derivatives and bonds are traded.Increasingly, stock exchanges are part of a global market for securities

Shares:-

The total authorized capital in the company is divided into small units and each isindividually called Share. You can buy large or small lots to match the amount ofmoney you want to invest. When the company does well, its shares can rise in value. Ifthe company hits a bad patch, its share can fall in value. The shares are considered as themain source to raise companys capital.

Share Holder:-

The people who provide finance to company by purchasing shares are calledshareholders.

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 onthese 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 onany kind of shares at the end of financial year than the right of dividend on these sharesaccumulates until all arrears of unpaid dividend have been paid.

Non-Cumulative preference shares: These are the shares on which if dividend is notpaid 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. Ordinaryshareholders receive the dividend proportionally out of profit earned by the companyafter the payment of fixed dividend on preference shares.

3. Deferred Shares:


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The share issued to promoters of the company is called deferred or founders shares. Thedividend on these shares is paid after the payment of dividend on all other types ofshares.

4. Types of operators on stock exchangeThe operators who buy and sell securities on

stock exchange are of several types. Some of them are described below:

1. Brokers:

A broker is a member of the stock exchange. He buys and sells the securities on thebehalf 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 securitiesaccording 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 ownbehalf. He is a dealer in securities. He usually specializes in one type of security. Hisincome comes from the profit or price difference in the purchase and sale of securities. Ajobber normally deals for himself but he is not prohibited from buying and sellingsecurities on the behalf of others.

3. Bulls:

A bull is a speculator who expects a rise in prices. Therefore, he buys securities with aview to sell them in future at a higher price thereby make profit. When the conditions inthe stock exchange are dominated by bulls, it is called a bullish market. When theprices 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 futuredelivery. He sells securities, which he does not possess. He sells with the hope to buy thesecurities at lower price before the date of delivery. The efforts of bears to bring downthe prices artificially are known as bear raids. When bears dominate the market, it iscalled a bearish market. When prices are rise and bears have to make purchases to meettheir commitments, it is called bear covering.

5. Trading procedure on Stock Exchange

In order to purchase or sell securities on a stock exchange, the following steps haveto be taken:


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1. Selection of Broker:

A broker is a member of stock exchange and securities can only be purchased and soldthrough him. After selecting the broker the investor has to convince the broker to buy orsell 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. Placing the order:

There are three parties involved in the dealing of shares:

The Stock Broker

The Client

The Jobber

The stock broker simply acts as agent and contacts the particular jobber in the stockexchange on behalf of the client. He does not disclose to the jobber whether he is a buyeror 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 abroker dealing on the stock exchange. The broker asks a jobber to give quotations. Hedoes not disclose the jobber whether he wants buy or sell the shares of a company. Thejobber 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 athousand. This means broker is willing to purchase at Rs.21.90 and sell at Rs.22.00 pershare. If the broker is not satisfied, he can go to another jobber or ask the first one tomake it closer (i.e. to reduce the margin between buying and selling). If the broker issatisfied with the new quotation, he then contacts with his client informs him the bid ofthe share. If the client agrees to the bid price, then bargain is struck

3. Preparing the contract note:

The stock broker prepares a contact note, one copy of which is given to the client; secondone to the jobber and the third remains with the broker. The contact note generallycontains the following information:

Name and the address of the stockbroker.

The name and address of the jobber.

The type and price of the share.


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The commission of the broker.

The date of transaction

4. Settlement:

In case of ready delivery contract, the buyer pays the money and the sellerdelivers the securities one same day.

In the case of forward delivery contracts settlements are done in a week or once ina month.

On the settlement day, the difference in the purchase and the sell price may be paidwithout any delivery of securities. The parties may also postpone the deal to the nextsettlement date through mutual consent. This is known as carryover or budla.

6.Role of Stock Exchange in economy

Stock exchanges have multiple roles in the economy, this may include the following:

1. Raising capital for businesses:

The Stock Exchange provides companies with the facility to raise capital for expansionthrough selling shares to the investing public. It induces people to save and invest insecurities. There is regular publicity of its operations, which encourages savings and

investments. People know that when they need money, they can easily sell theresecurities on stock exchange. Therefore, they are more willing to invest there savings insecurities. Thus a stock exchange serves as an instrument for raising capital.

2. Mobilizing savings for investment:

When people draw their savings and invest in shares, it leads to a more rational allocationof resources because funds, which could have been consumed, or kept in idle depositswith banks, are mobilized and redirected to promote business activity with benefits forseveral economic sectors such as agriculture, commerce and industry, resulting instronger economic growth and higher productivity levels and firms.

3. Facilitating company growth:

Companies view acquisitions as an opportunity to expand product lines, increasedistribution channels, hedge against volatility, increase its market shares, or acquire othernecessary business assets. A takeover bid or a merger agreement through the stockmarket is one of the simplest and most common ways for a company to grow byacquisition or fusion.


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4. Redistribution of wealth: Stock exchanges do not exist to redistribute wealth.However, both casual and professional stock investors through dividends and stock priceincreases that may result in capital gains will share in the wealth of profitable businesses.

5. Corporate governance:

By having a wide and varied scope of owners, companies generally tend to improve ontheir management standards and efficiency in order to satisfy the demands of theseshareholders and the more stringent rules for public corporations imposed by public stockexchanges and the government. Consequently, it is alleged that public companies(companies that are owned by shareholders who are members of the general public andtrade shares on public exchanges) tend to have better management records than privately-held companies (those companies where shares are not publicly traded, often owned bythe company founders and/or their families and heirs, or otherwise by a small group ofinvestors). However, some well-documented cases are known where it is alleged thatthere 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 in2007-08, 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 themost widely scrutinized by the media.

6. Creating investment opportunities for small investors:

As opposed to other businesses that require huge capital outlay, investing in shares isopen to both the large and small stock investors because a person buys the number ofshares they can afford. Therefore the Stock Exchange provides the opportunity for smallinvestors to own shares of the same companies as large investors.

7. Government capital-raising for development projects:

Governments at various levels may decide to borrow money in order to financeinfrastructure projects such as sewage and water treatment works or housing estates byselling another category of securities, known as bonds. These bonds can be raisedthrough the Stock Exchange whereby members of the public buy them, thus loaningmoney to the government. The issuance of such bonds can obviate (to remove) the needto directly tax the citizens in order to finance development, although by securing suchbonds with the full faith and credit of the government instead of with collateral (side byside), the result is that the government must tax the citizens or otherwise raise additionalfunds to make any regular coupon payments and refund the principal when the bondsmature.

8. Barometer of the economy:


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At the stock exchange, share prices rise and fall depending, largely, on market forces.Share prices tend to rise or remain stable when companies and the economy in generalshow signs of stability and growth. An economic recession, depression, or financial crisiscould eventually lead to a stock market crash. Therefore the movement of share pricesand in general of the stock indexes can be an indicator of the general trend in the

economy.

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 andregulations prescribed by the stock exchange.

10. Employment Opportunities:

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 ofemployment not only for investors but also for the members and there employees.

7. Listing of Securities on Stock Exchange

All securities are not dealt on stock exchange. Only those securities are sold or purchasedwhich are included in trading list of the stock exchange. In order to get a security listedon stock exchange for trading purposes, the company issuing such a security must makean application along with following prescribed documents.

1) Copies of memorandum, articles, prospects, directors report, balance sheet andagreement with underwriters.

2) Specimen copies of shares, debentures, certificates, letter of allotment andacceptance, etc.

3) Particulars regarding capital structures.

4) A statement showing the distribution of shares.

5) Particulars of dividends and each bonus declared since its incorporation.

6) Particulars of shares and debentures for each, permission are required.

7) A brief history of the companys activities since its incorporation.

After the scrutiny of application, if the stock exchange authorities are satisfied, they callupon the company to execute the listing agreement. The listing agreement contains thefollowing conditions and obligations:


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1) The company must be fair to all the applicants for shares. In the case of oversubscription, 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 ofdividend 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 thecompanys business.

5) To notify the stock exchange any change in the capital of the company.

6) To notify the issue of any new shares including bonus shares.

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 orcancellation of any listed security.

9) To avoid, the establishment of a false market for the listed securities.

10) To supply the stock exchange any other information necessary to enable theshareholders to know about the companys position.

8. Ownership of Stock Exchange

Stock exchanges originated as mutual organizations, owned by its member stock brokers.There has been a recent trend for stock exchanges to demutualize, where the memberssell their shares in an initial public offering. In this way the mutual organization becomesa corporation, with shares that are listed on a stock exchange. Examples are AustralianSecurities Exchange (1998), Euro next(merged with New York Stock Exchange),NASDAQ (2002), theNew York Stock Exchange (2005), Bolsas y Mercados Espaoles,and theSo Paulo Stock Exchange (2007). The Shenzhen and Shanghai stock exchangescan been characterized as quasi-state institutions insofar as they were created bygovernment bodies in China and their leading personnel are directly appointed by theChina Securities Regulatory Commission.

9. The future of stock exchanges

The future of stock trading appears to be electronic, as competition is continuallygrowing between the remaining traditionalNew York Stock Exchangespecialist systemagainst the relatively new, allElectronic Communications Networks, or ECNs. ECNs
http://en.wikipedia.org/wiki/Initial_public_offeringhttp://en.wikipedia.org/wiki/Australian_Securities_Exchangehttp://en.wikipedia.org/wiki/Australian_Securities_Exchangehttp://en.wikipedia.org/wiki/Euronexthttp://en.wikipedia.org/wiki/Euronexthttp://en.wikipedia.org/wiki/NASDAQhttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Bolsas_y_Mercados_Espa%C3%B1oleshttp://en.wikipedia.org/wiki/S%C3%A3o_Paulo_Stock_Exchangehttp://en.wikipedia.org/wiki/S%C3%A3o_Paulo_Stock_Exchangehttp://en.wikipedia.org/wiki/Shenzhen_Stock_Exchangehttp://en.wikipedia.org/wiki/Shanghai_Stock_Exchangehttp://en.wikipedia.org/wiki/China_Securities_Regulatory_Commissionhttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Market_makerhttp://en.wikipedia.org/wiki/Electronic_Communications_Networkhttp://en.wikipedia.org/wiki/Electronic_Communications_Networkhttp://en.wikipedia.org/wiki/Initial_public_offeringhttp://en.wikipedia.org/wiki/Australian_Securities_Exchangehttp://en.wikipedia.org/wiki/Australian_Securities_Exchangehttp://en.wikipedia.org/wiki/Euronexthttp://en.wikipedia.org/wiki/NASDAQhttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Bolsas_y_Mercados_Espa%C3%B1oleshttp://en.wikipedia.org/wiki/S%C3%A3o_Paulo_Stock_Exchangehttp://en.wikipedia.org/wiki/Shenzhen_Stock_Exchangehttp://en.wikipedia.org/wiki/Shanghai_Stock_Exchangehttp://en.wikipedia.org/wiki/China_Securities_Regulatory_Commissionhttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Market_makerhttp://en.wikipedia.org/wiki/Electronic_Communications_Network


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point to their speedy execution of large block trades, while specialist system proponentscite the role of specialists in maintaining orderly markets, especially under extraordinaryconditions or for special types of orders. UK based exchanges such as PLUS Markets areincreasing competition with traditional exchanges.

The ECNs contend that an array of special interests profit at the expense of investors ineven the most mundane exchange-directed trades. Machine-based systems, they argue,are much more efficient, because they speed up the execution mechanism and eliminatethe need to deal with an intermediary.

Historically, the 'market' (which, as noted, encompasses the totality of stock trading on allexchanges) has been slow to respond to technological innovation, thus allowing growingpure speculation to continue. Conversion to all-electronic trading could erode/eliminatethe trading profits of floor specialists and the NYSE's "upstairs traders", who, like inSeptember and October 2008, earned billions of dollars selling shares they did not have,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 beenquoted as saying "I'd definitely say the ECNs are winning... Things happen awfully fastonce 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, bywhich manual Wall Street traders use knowledge of a customer's incoming order to placetheir own orders so as to benefit from the perceived change to market direction that theintroduction of a large order will cause. By executing large trades at lightning speedwithout manual intervention, ECNs make impossible this illegal practice, for which

several NYSE floor brokers were investigated and severely fined in recent years Underthe specialist system, when the market sees a large trade in a name, other buyers areimmediately able to look to see how big the trader is in the name, and make inferencesabout why s/he is selling or buying. All traders who are quick enough are able to use thatinformation to anticipate price movements.

ECNs have changed ordinary stock transaction processing (like brokerage services beforethem) into a commodity-type business. ECNs could regulate the fairness of initial publicofferings (IPOs), overseeHambrecht's Open IPO process, or measure the effectivenessof securities research and use transaction fees to subsidize small- and mid-cap researchefforts.

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 ofGeneral Electric stock (recent quote: $7.54; recent volume:216,266,000) would be a relatively simple e-commerce transaction; trading 100 shares ofBerkshire Hathaway Class A stock (recent quote: $72,625.00; recent volume: 877) maynever be. The choice of system should be clear (but always that of the trader), based onthe characteristics of the security to be traded.
http://en.wikipedia.org/wiki/PLUS_Marketshttp://en.wikipedia.org/wiki/Stock_markethttp://en.wikipedia.org/wiki/Stock_markethttp://en.wikipedia.org/wiki/Instinethttp://en.wikipedia.org/wiki/Front_runninghttp://en.wikipedia.org/wiki/Hambrecht's_OpenIPOhttp://en.wikipedia.org/wiki/Hambrecht's_OpenIPOhttp://en.wikipedia.org/wiki/General_Electrichttp://en.wikipedia.org/wiki/General_Electrichttp://en.wikipedia.org/wiki/Berkshire_Hathawayhttp://en.wikipedia.org/wiki/PLUS_Marketshttp://en.wikipedia.org/wiki/Stock_markethttp://en.wikipedia.org/wiki/Instinethttp://en.wikipedia.org/wiki/Front_runninghttp://en.wikipedia.org/wiki/Hambrecht's_OpenIPOhttp://en.wikipedia.org/wiki/General_Electrichttp://en.wikipedia.org/wiki/Berkshire_Hathaway


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Even with ECNs forming an important part of a national market system, opportunitiespresumably remain to profit from the spread between the bid and offer price. That isespecially true for investment managers that direct huge trading volume, and own a stakein 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 theBoston Stock Exchange, where anaffiliate controls a specialist post."

10. Other types of exchanges

In the 19th century, exchanges were opened to trade forward contracts on commodities.Exchange traded forward contracts are called futures contracts. These commodityexchanges later started offering future contracts on other products, such as interest ratesand shares, as well asoptions contracts. They are now generally known as futuresexchanges.

3. Functions of stock exchange

Function of SE

Function asMain activities

In favor of investor

An organization
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The functions of stock exchange are as following

1. Main activities:

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.

2. Functions as an organization are:

In favor of companies


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To guarantee the legal and economic security of the agreed contracts.

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:

It permits him the access to the profitable activities of the big companies.

It offers liquidity to the security investments, through a place in which to sell or

buy securities.

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 offers the possibility of diversifying your portfolio by enlarging the field of

strategy of investments due to alternative options, as could be the derived

market, the money market, etc.

4. Function in favor of the companies:

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


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(television, radio, etc.) in case any important change in its owners (the share

holders).

5. Constant following of the quotations.

Therefore we can see how the stock exchange market supposes a great advantage to the

companies, but there are also some inconveniences to have in mind:

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

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.


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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.

3. Major stock exchange

World major SE

Regions


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Twenty Major Stock Exchanges In The World: Market Capitalization & Year-to-date Total

Turnover at the end of August 2009

Region Stock ExchangeMarket Value

(millionsUSD)

Total ShareTurnover

(millions USD)

Africa Johannesburg Securities Exchange 690,797.5 210,180.8

Americas NASDAQ 2,847,535.2 19,343,868.3

Americas So Paulo Stock Exchange 1,032,518.4 361,959.0

Americas Toronto Stock Exchange 1,432,877.0 798,193.1

EuropeAfricaAmerica Asia
http://en.wikipedia.org/wiki/USDhttp://en.wikipedia.org/wiki/USDhttp://en.wikipedia.org/wiki/JSE_Securities_Exchangehttp://en.wikipedia.org/wiki/NASDAQhttp://en.wikipedia.org/wiki/Bovespahttp://en.wikipedia.org/wiki/Toronto_Stock_Exchangehttp://en.wikipedia.org/wiki/USDhttp://en.wikipedia.org/wiki/USDhttp://en.wikipedia.org/wiki/JSE_Securities_Exchangehttp://en.wikipedia.org/wiki/NASDAQhttp://en.wikipedia.org/wiki/Bovespahttp://en.wikipedia.org/wiki/Toronto_Stock_Exchange


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Americas New York Stock Exchange 10,842,001.9 12,158,620.6

Asia-Pacific

Australian Securities Exchange 1,066,513.2 560,912.8

Asia-Pacific

Bombay Stock Exchange 1,082,572.0 171,176.2

Asia-Pacific

Hong Kong Stock Exchange 1,945,517.7 970,227.6

Asia-Pacific

Korea Exchange 727,125.3 1,050,473.8

Asia-Pacific

National Stock Exchange of India 1,019,109.0 506,652.3

Asia-

Pacific

Shanghai Stock Exchange 2,142,756.8 3,315,768.5

Asia-Pacific

Shenzhen Stock Exchange 596,320.2 1,701,256.8

Asia-Pacific

Tokyo Stock Exchange 3,478,602.5 2,675,983.3

Europe Euro next 2,605,097.6 1,195,962.2

Europe Frankfurt Stock Exchange (Deutsche Brse) 1,204,292.0 1,589,736.7

Europe London Stock Exchange 2,560,491.1 2,321,518.5

Europe Madrid Stock Exchange (Bolsas y Mercados 1,178,525.6 1,040,751.1
http://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Australian_Securities_Exchangehttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Hong_Kong_Stock_Exchangehttp://en.wikipedia.org/wiki/Korea_Exchangehttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/Shanghai_Stock_Exchangehttp://en.wikipedia.org/wiki/Shenzhen_Stock_Exchangehttp://en.wikipedia.org/wiki/Tokyo_Stock_Exchangehttp://en.wikipedia.org/wiki/Euronexthttp://en.wikipedia.org/wiki/Frankfurt_Stock_Exchangehttp://en.wikipedia.org/wiki/Deutsche_B%C3%B6rsehttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/Bolsa_de_Madridhttp://en.wikipedia.org/wiki/Bolsas_y_Mercados_Espa%C3%B1oleshttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Australian_Securities_Exchangehttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Hong_Kong_Stock_Exchangehttp://en.wikipedia.org/wiki/Korea_Exchangehttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/Shanghai_Stock_Exchangehttp://en.wikipedia.org/wiki/Shenzhen_Stock_Exchangehttp://en.wikipedia.org/wiki/Tokyo_Stock_Exchangehttp://en.wikipedia.org/wiki/Euronexthttp://en.wikipedia.org/wiki/Frankfurt_Stock_Exchangehttp://en.wikipedia.org/wiki/Deutsche_B%C3%B6rsehttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/Bolsa_de_Madridhttp://en.wikipedia.org/wiki/Bolsas_y_Mercados_Espa%C3%B1oles


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Espaoles)

Europe Milan Stock Exchange (Bursa Italiana) 636,674.8 565,759.3

Europe Nordic Stock Exchange Group OMX1 781,146.3 503,049.9

Europe Swiss Exchange 992,356.4 520,867.5

4. Stock exchange of Pakistan

Pakistan stockexchange
http://en.wikipedia.org/wiki/Bolsas_y_Mercados_Espa%C3%B1oleshttp://en.wikipedia.org/wiki/Milan_Stock_Exchangehttp://en.wikipedia.org/wiki/OMXhttp://en.wikipedia.org/wiki/Stock_exchange#endnote_1http://en.wikipedia.org/wiki/Stock_exchange#endnote_1http://en.wikipedia.org/wiki/Swiss_Exchangehttp://en.wikipedia.org/wiki/Bolsas_y_Mercados_Espa%C3%B1oleshttp://en.wikipedia.org/wiki/Bolsas_y_Mercados_Espa%C3%B1oleshttp://en.wikipedia.org/wiki/Milan_Stock_Exchangehttp://en.wikipedia.org/wiki/OMXhttp://en.wikipedia.org/wiki/Stock_exchange#endnote_1http://en.wikipedia.org/wiki/Swiss_Exchange


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1. Karachi Stock Exchange

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 manyPakistani as well as overseas listings. Its current premises are situated on Stock ExchangeRoad, in the heart of Karachi's Business District. Later on two more stock exchanges wereformed in Lahore (1971) and Islamabad (1992) to facilitate the investment in securities. Theinvestors get opportunities of international investment due to contract of Pakistans stockexchanges with other countries. The stock exchange not only informs the investors aboutinternational business trends but also plays important role in strengthening the economy of thecountry.

Karachi stockexchange (KSE)

Islamabad stockexchange (ISE)

Lahore stockexchange (LSE)


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History:-

The KSE is the first stock exchange located in Karachi, Sindh, Pakistan Founded in1947; it is Pakistan's largest and oldest stock exchange, with many Pakistani as well asoverseas listings. Its current premises are situated on Stock Exchange Road, in the heart ofKarachi's Business District.

Trading:-

The exchange has

Pre-market sessions from 09:15am to 09:30am.

Normal trading sessions from 09:30am to 03:30pm.It is the second oldest stock exchange in South Asia.The Karachi stock exchange has undergone a considerable deal of downturn partly due

to global financial crisis and partly on account of domestic troubles. It remained suspended inexcess of 4 months and resumed normal trading only on December 15, 2008. The KSE 100Index and KSE 30 Index after hitting the low around mid January has now re bounced andrecovered 20-25% till March 12th 2009.

Growth:-

The KSE is the biggest and most liquid exchange in Pakistan and in 2002, it wasdeclared as the Best Performing Stock Market of the World. As of December 20, 2007, 671companies 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 KSE100 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 in2007. According to estimates from the State Bank of Pakistan, foreign investment in capitalmarkets total about US$523 Million. According to a research analyst in Pakistan, around 20pcof 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 isthe election year in Pakistan, and stocks are expected to remain dull. KSE has set an all timehigh of 15,000 points, before settling around the 14,000 mark.

Karachi stock exchange Board Of Directors (2007) announced plans to construct a 40story high rise KSE building, as a new direction for future investment.

Disputes between investors and members of the Exchange are resolved throughdeliberations of the Arbitration Committee of the Exchange.


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KSE began with a 50 shares index. As the market grew a representative index wasneeded. On November 1st, 91 the KSE-100 was introduced and remains to this day the mostgenerally accepted measure of the Exchange. Karachi Stock Exchange 100 Index (KSE-100Index) is a benchmark used to compare prices overtime, companies with the highest marketcapitalization 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 toprovide the basis of index trading in future. On August the 29th, 1995 the KSE all share indexwas constructed and introduced on September, 18, 1995.

2008 Karachi Stock Exchange Crisis

April 20:-

Karachi Stock Exchange achieved a major milestone when KSE-100 Indexcrossed the psychological level of 15,000 for the first time in its history and peaked15,737.32 on 20 April, 2008. Moreover, the increase of 7.4 per cent in 2008 made it thebest performer among major emerging markets.

May 23:-

Record high inflation in the month of May, 2008 resulted in the unexpectedincrease 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 plungingPakistani share prices.

July 16 :-

KSE-100 Index dropped one-third from an all-time high hit in April, 2008 as risingpressure 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 ofPresident Pervez Musharaf but Credit Suisse Group said that Pakistan's Post-Musharaf rallyin Stock Exchange will be short-lived because of a rising fiscal deficit and runawayinflation.
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August 28 :-

Karachi Stock Exchange set a floor for stock prices to halt a plunge that has wipedout $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 28to 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 abenchmark to compare prices on the Karachi Stock Exchange (KSE) over a period of time. Indetermining representative companies to compute the index on, companies with the highestmarket capitalization are selected. However, to ensure full market representation, the companywith the highest market capitalization from each sector is also included.

History:-

The index was launched in late 1991 with a base of 1,000 points. By 2001, it had grownto 1,770 points. By 2005, it had skyrocketed to 9,989 points. It then reached a peak of 12,285in February 2007. KSE-100 index touched the highest ever benchmark of 14,814 points onDecember 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 near15,500 in April. However, by November 22, 2008 during the global financial crisis of 2008, ithad fallen to 9,187.

Top 30 KSE 100 Index companies:-

The following is a list of 30 companies with the highest market capitalization volumeand their respective weight ages in the index and account for over 80% of the KSE index as ofFebruary 20, 2008:
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Number Company NameWeight age

(%)Market Capitalization (PKR)

1 OGDCL 14.14 550,948,930,000

2 MCB 7.17 279,583,150,000

3 National Bank Of Pakistan 5.43 211,726,900,000

4 Pakistan Petroleum 5.06 197,201,080,000

5 Standard Chartered Bank 4.41 171,704,800,000

6 PTCL 4.28 166,810,800,000

7 United Bank Limited 4.13 161,025,160,000

8 Jahangir Siddiqui &Company 2.66 103,600,000,000

9 Pakistan State Oil 2.08 81,034,440,000

10 Allied Bank Limited 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 Fuji Fertilizer Company 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 Arif Habib Securities 1.40 54,660,000,000

17 NIB Bank 1.27 49,320,250,000

18 Kot Addu Power Company 1.19 46,565,400,000

19 EFU General Insurance 1.16 45,300,000,000

20 Bank Of Punjab 1.13 43,869,030,000

21 Fuji Fertilizer Bin Qasim 1.06 41,474,480,000

22 Bank Alfalfa 1.03 39,975,000,000

23 Adam jee Insurance 1.01 39,258,300,000

24 Pakistan Tobacco Company 0.99 38,707,280,000

25 Sui Northern Gas Pipeline 0.98 38,300,100,00026 Hub Power Company 0.98 38,128,240,000

27 Dawood Hercules Chemicals 0.91 35,549,620,000

28 Habib Metropolitan Bank 0.91 35,354,280,000

29 EFU Life Assurance 0.89 34,750,000,000

30 Lucky Cement 0.86 33,593,480,000


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KSE-30 Index:

The Karachi Stock Exchange has launched the KSE-30 Index with base value of 10,000points, formally implemented from Friday, September 1, 2006. The main feature of thisindex 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 notreduced/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 of17,162.45.

Market Indices:-

KSE began with a 50 shares index. As the market grew a representative index wasneeded. On November 1, 1991 the KSE-100 was introduced and remains to this date the mostgenerally accepted measure of the Exchange. The KSE-100 is a capital weighted index andconsists of 100 companies representing about 90 percent of market capitalization of theExchange. In 1995 the need was felt for an all share index to reconfirm the KSE-100 and alsoto provide the basis of index trading in future. On August 29,1995 the KSE all share index wasconstructed and introduced on September 18, 1995.

Monthly Performance:-

Market monthly performance during the period January 2006 to April 2009 is given under withhigh rated index showing in bold text. The highest ever closing for KSE 100 Index wasachieved 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 toprevent a further fall. The floor was finally removed on December 15, 2008 that had broughtthe bourse to a virtual halt for more than 100 days.


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Number Volume Index Date

1 402,639,040 9,672.47 02/01/2006

2 805,494,080 10,497.07 01/02/2006

3 761,960,000 11,473.99 01/03/2006

4 387,000,896 11,573.94 03/04/2006

5 331,884,928 11,572.94 02/05/2006

6 251,317,072 10,183.77 01/06/2006

7 152,448,096 9,603.71 03/07/2006

8 284,526,880 10,507.09 01/08/2006

9 171,682,624 10,170.97 01/09/2006

10 224,694,528 10,616.24 02/10/2006

11 310,985,696 11,011.13 01/11/2006

12 172,052,400 10,388.19 01/12/2006

13 39,200,120 10,066.68 03/01/2007

14 480,905,216 11,349.44 01/02/2007

15 229,188,400 11,207.64 01/03/2007

16 73,447,224 11,277.13 02/04/2007

17 431,508,448 12,433.76 02/05/2007

18 460,166,784 12,933.66 01/06/2007

19 471,708,992 13,929.70 02/07/2007

20 326,983,008 13,689.03 01/08/2007

21 179,963,648 12,233.14 03/09/2007

22 367,242,752 13,737.74 01/10/2007

23 328,071,488 13,932.41 01/11/2007

24 137,879,220 13,925.59 03/12/2007

25 375,074,240 13,666.85 01/01/2008

26 151,358,160 13,974.40 01/02/2008


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27 196,083,660 14,816.50 03/03/2008

28 218,399,820 15,210.17 01/04/2008

29 257,965,456 14,956.82 02/05/2008

30 169,125,456 12,281.20 02/06/2008

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

2. Lahore Stock Exchange

Lahore Stock Exchange (Guarantee) Limited is Pakistan's second largest stock exchange afterthe 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 tradedvolumes. LSE has 519 companies, spanning 37 sectors of the economy, that are listed on theExchange with total listed capital of Rs. 555.67 billion having market capitalization of aroundRs. 3.64 trillion. LSE has 152 members of whom 81 are corporate and 54 are individualmembers.

Activities of Lahore Stock Exchange (LSE) have increased significantly in all operational areassince its inception. Over the years, LSE has successfully met various challenges and has now
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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 itstransactions are via the internet.

The Lahore Stock Exchange has opened branches in the industrial cities of Faisalabad andSialkot 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 ofstocks assuming that all rights issues andbonus shareissues only increase the listed capital. Inthe case of bonuses or rights the prices of the shares are not adjusted as they are in the case ofthe LSETRI. However, the LSE25 assumes that dividends paid out by a component company

are notreinvested. In summary, in the LSE25, no price adjustments are made when anycomponent company issues cash dividends.

The Lahore Stock Exchange Total Return Index calculates the performance of stocks assumingthat all payouts are reinvested in the index on the ex-date. The LSETRI assumes that if acomponent company issues bonus shares or announces a rights issue it will increase the listedcapital. Additionally, the LSETRI also assumes that all pay-outs by a component company are100% reinvested in the index. Therefore, the LSETRI is adjusted against such payoutsannounced by any of index constituents on its ex-date allowing the index value to remaincomparable over time.

LSE's Membership Structure

YearPrivate Limited

Companies

Corporate MembersBanks or their

Subsidiaries

Individual

MembersTotalPublic Limited

Companies

2000 26 3 6 3 118 118

2001 26 6 5 3 118 118

2002 26 5 6 3 118 118

2003 26 6 4 3 118 118

2004 44 4 5 3 118 118

2005 26 7 5 3 118 1182006 22 6 7 3 118 118

2007 24 5 4 3 118 118

Sialkot Trading Floor (STF):
http://wiki/Stockhttp://wiki/Bonus_sharehttp://wiki/Bonus_sharehttp://wiki/Capital_(economics)http://wiki/Dividendhttp://wiki/Investinghttp://wiki/Investinghttp://wiki/Stockhttp://wiki/Bonus_sharehttp://wiki/Capital_(economics)http://wiki/Dividendhttp://wiki/Investing


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Is one of the two branch offices of LahoreStock Exchange (LSE) in order expand its boundaries and make ease of its access in majorcites of country. Acting as a part of LSE, STF is going forward day by day to achieve aims,goals and aspirations of its ancestor. It is located in the building of Sialkot Chamber ofCommerce & Industry in Sialkot. All of the brokerage houses whether active or nonnative at

STF are registered houses in LSE as well as these houses are governed by Security ExchangeCommission of Pakistan (SECP).

Facilities at Sialkot Trading Floor

Online Trading Terminals (TWS).

View Only Terminals (VOT).

Technical Support Regarding Trading System.

Limited Hardware Support / Trouble Shooting.

Ultimate Support and Assistance of web VOT & TWS for People at their locality.

3. Islamabad Stock Exchange

Islamabad Stock Exchange is one of the three stock exchanges ofPakistan and is located in thecapital ofIslamabad.

History:-

The Islamabad Stock Exchange (ISE) was incorporated as a guarantee limited Company on25th October, 1989 in Islamabad Capital territory of Pakistan with the main object of setting upof 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 forestablishment of the stock exchange in Islamabad was to cater to the needs of less developedareas of the northern part of Pakistan.

The ISE Towers comprise twin 22 storey towers with unique and inspiring amenities, offerfuturistically and aesthetically designed offices with panoramic views, is being constructedover 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. Thebuilding is facing 400 feet wide Jinnah Avenue on one side and has another entrance from 100
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feet wide Nazimuddin Road, besides breathtaking scenic view of the Margalla Hills and thecity from the building.

Islamabad Stock Exchange Building, Register Companies and Members:-

At present there are 119 members out of which 93 are corporate bodies including commercialand investment banks, DFIs and brokerage houses. The other 26 Members are individualpersons who are well educated, enterprising and progressive minded. The affairs of theExchange are governed by the Board of Directors. The Board of Directors consists of tendirectors, 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 directorof the Board. In order to protect the interest of the investing public, an Investors Protectionfund has been established by the Exchange.

Since the inception of automated trading system (ISECTS), the trade volume has beenmultiplying day by day and the average daily turnover has now crossed the figure of 1 millionshares. Now all the listed securities are traded through the ISECTS. The system of physicalhandling of shares and securities has been phased out and majority of the scrips are settledthrough 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 04-04-2007 . The pace of listing has remained slow as the economy of the Country is underconsistent pressure due to internal as well as external factors.

In comparison with major financial markets around the World, the functioning of capitalmarket in Pakistan is still very much in its infancy and lacks advanced technology.


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References:-

Internet

Print media

Electronic media

Documents

24016453-Stock-exchange-its-functions-and-operations (1).doc