Stock Exchage Working

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About Stock Exchage

(A stock exchange, securities exchange or bourse is a corporation or mutual organization which provides

"trading" facilities for stock brokers and traders, to trade stocks and other securities.)

Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial

instruments and capital events including the payment of income anddivid ends. The securities traded on a stock

exchange include:shares issued by companies, unit trusts and other pooled investment products andbonds. 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 less linked to such a physical place, as modern markets

are electronic networks, which gives them advantages of speed and cost of transactions. Trade on an exchange

is by members only. The initial offering of stocks and bonds toinvestors is by definition done 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. Supply and demand in stock markets is driven by various factors which, as in all

free markets, affect the price of stocks (see stock valuation).

The role of stock exchanges

Raising capital for businesses

Mobilizing savings for investment

Facilitating company growth

Redistribution of wealth

Corporate governance

Creating investment opportunities for small investors

Government capital-raising for development projects

Barometer of the economy


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There is usually no compulsion to issue stock via the stock exchang

Stock Exchange of PakistanPage 4 of 28

Stock Exchange In PakistanIn Pakistan there are three Stock Exchanges.. Karachi Stock Exchange(KSE) Lahore Stock Exchange(LSE) Islamabad Stock Exchange (ISE)

1) Karachi Stock ExchangeThe Karachi Stock Exchange or KSE is a stock exchange located inKarach i,Sindh,Pakistan. Founded in 1947, it is Pakistan's largest and oldest stock exchange, withmany Pakistani as well as overseas listings. Its current premises are situated on StockExchange Road, in the heart of Karachi's Business District.

Karachi Stock Exchange is the biggest and most liquid exchange and has been declared as the Best

Performing Stock Market of the World for the year 2002. As on December 31, 2008, 653 companies were

listed with the market capitalization of Rs. 1,858,698.90 billion (US $ 23,527.83 billion) having listed capital

of Rs. 750.48 billion (US $ 9.50 billion). The KSE 100 Index closed at 5865.01 on December 31, 2008.

KSE has been well into the 4th year of being one of the Best Performing Markets of the world as declared by

the international magazine Business Week. Similarly the US newspaper, USA Today, termed Karachi Stock

Exchange as one of the best performing bourses in the world.

History of KSE

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 theassassin ation of

former Prime MinisterBenazir Bhutto, when the index nosedived.[2] 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.

GROWTH & PROGRESS* As on December 31, 2008Today KSE has emerged as the key institution of the capital formation in Pakistanwith:- Listed companies 653, securities listed on the exchange 692: ordinary share653, Preference shares 14 and debt securities (TFC's) 25.


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BOARD OF DIRECTORS

The KSE is run by a Board of Directors that consists of 10 members including Managing

Director. Out of these, 5 Directors are elected from amongst 200 members of the Exchange and 4

non-member Directors are nominated and appointed by SECP from amongst the professionals

belonging to various trades and professions. The Chairman is elected by the Board from amongstthe non-member Directors. The operational and administrative activities of the Exchange are

managed by the Managing Director who is the full time Chief Executive of the Exchange.

INVESTMENT CLIMATEEquity Market

In 1991, the secondary market was opened for foreign investors on an equal basiswith the local investors. This measure along with the government policy of

privatisation has resulted in rapid growth of the market since 1991. It may also be

mentioned that "privatisation" has bee n adopted as a philosophy and most of thebusiness & finance activities which were previously reserved for the public sectorhave now been opened for the private sector. The change of policy is most visiblein the financial sector where a number of commercial banks, investment banks,discount houses, leasing companies, modarabas, life insurance companies andmutual funds have been allowed in the private sector.

Liberalisation policy has led to rapid deregulation of the national economy and the

impediments to private initiative have been speedily removed. Foreign exchangeholdings and transfers have been liberalised, industrial sanctioning has been doneaway with except for few sectors where, for strategic reasons, prior permission ofthe government is necessary.

Legal FrameworkThe securities market and the corporate sector are regulated by the provisions of :1. The Companies Ordinance 1984;2. The Securities and Exchange Ordinance 1969 and Rules framed thereunder in1971;

3. The Securities & Exchange Commission Act 1999.

There are also Federal legislations relating to specific areas like:1. Monopolies and Restrictive Trade Practices (Control and Prevention)

Ordinance, 1970;2. Investment Companies and Investment Advisors Rules 1971;3. Modaraba Companies and Modaraba (Flotation and Control) Ordinance, 1980;4. Companies (Issue of Capital ) Rules 1996;


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5. Leasing Companies (establishment and Regulation) Rules 1996;6. Asset Management Companies Rules 1996;7. Insurance Companies Ordinance 2000;8. Guidelines for insiders trading.

In addition to above, the listed companies are also subject to the Rules andRegulations of the stock exchanges.The Regulator

The regulatory authority for the securities market and corporate sector in Pakistan is

the Securities and Exchange Commission of Pakistan. The Commission was

established on January 01,1999 by dissolving the Corporate Law Authority which was

formed in 1981 under a Special Law. The Commission administers the compliance of

the Corporate laws in the country. The Commission is run by the Commissioners

under a Chairman.

The Asian Development Bank's Capital Market Development Programme envisaged the

conversion of CLA into Securities and Exchange Commission of Pakistan, as an autonomous

regulatory authority. The new system provides administrative, operational and financial

autonomy to the Commission and at the same time provides an accountability mechanism

through establishment of a Securities and Exchange Policy Board. All policy decisions are made

by the Board on the recommendations of the Commission which is also empowered to take suo

motto action. The Board is directly answerable to the Parliament.

Members of the stock exchanges are also subject to the discipline of self-regulation under

various Rules and Regulations of the stock exchanges. Self-Regulation is the essence of market

regulation and for this purpose the legal framework has been amended to facilitate the attainment

of SRO status by the stock exchanges.


30171,682,624 10,170.97 01/09/200631284,526,880 10,507.09 01/08/200632152,448,096 9,603.71 03/07/200632251,317,072 10,183.77 01/06/200634


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331,884,928 11,572.94 02/05/200635387,000,896 11,573.94 03/04/200636761,960,000 11,473.99 01/03/200637

805,494,080 10,497.07 01/02/200638402,639,040 9,672.47 02/01/2006

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 basisof paid-up capital.

The other indices 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 13th July, 2007, KSE-30 Index has reached its highest ever level of17,162.45.

The Islamia University Of Bahawalpur Rahim Yar Khan Campus


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TIMINGSHOLIDAYS



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CONTACT KSE2) Lahore Stock ExchangeLahore Stock Exchange (Guarantee) Limited is Pakistan's second largest stockexchange after the Karachi Stock Exchange. It is located Lahore, Pakistan.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


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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 ofLahore 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.

History Of LSE

Lahore Stock Exchange (Guarantee) Limited came into existence in October 1970, under the Securities and

Exchange Ordinance, 1969, of the Government of Pakistan in response to the needs of the provincial

metropolis of the province of Punjab. It initially had 83 members and was housed in a rented building in the

crowded area of Bank Square in Lahore. The number listed companies has increased to 519 since its

inceptopn.With 37 sectors of economy and 519 listed companies with total capital of Rs. 555.67 billion having

market capitalization of around Rs. 3.64 trillion . LSE has 152 members of whom 81 are corporate 54 are

individual members.LSE was first stock exchaneg of pakistan which used internet and currently 50% of its

transactions are done on internet.

Lahore Stock Exchange has opened branches in the industrial cities of Faisalabad andSialkot for trading. The Sialkot branch is referred to as "Sialkot Trading Floor".

Important Developments over the Past Years

A number of significant initiatives have been taken to improve the regulatory regime and the trading

environment for the benefit of Institutional Investors as well as listed companies. Although the list of such

initiatives is exhaustive, below some of these incentives are touched upon;

LSE was the first Exchange in the country to undertake automation of trading at the exchanges in 1994. LSE

has made large investments in technology & automation to keep pace with globalization of securities trading.

The Exchange is fully committed to providing a transparent, efficient, fair and investor friendly environment

for the benefit of Investors and Issuers. The goal is to bring LSE up to international standards in operational,

technical, regulatory and quality management areas and to ensure that not only domestic but also foreign

investors are attracted.

The Islamia University Of Bahawalpur Rahim Yar Khan CampusStock Exchange of PakistanPage 18 of 28


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LSE has made direct investment in Pakistan Credit Rating Agency (Pvt) Ltd. (PACRA), Central Depository

Company Ltd. (CDC), National Clearing Company of Pakistan Ltd. (NCCPL), and National Commodity

Exchange Ltd. (NCEL), all of which play a central role in developing the infrastructure around the financial

markets of Pakistan. In addition, LSE is an active member of the Federation of Euro-Asian Stock Exchanges

(FEAS) and the South Asian Federation of Exchanges (SAFE), helping to expand its outreach, presence and

profile beyond the boundaries of Pakistan.

LSE was the first Exchange in Pakistan to offer Internet based trading to its members in the year 2001. It

enables the brokers to reach out to the untapped retail markets. Currently, more than 50% of the total trading

volume at the LSE originates from Internet trading terminals. The aim of this measure is to transform the LSE

from a regional to a national player over a period of time.

LSE has increased its geographical outreach by establishing its branches in other cities of the Province. Two

such branch offices have become operational in Faisalabad and Sialkot. Similar Offices in other cities are also

being contemplated. LSEs trading system has already been modified to connect branch offices in real-time

fashion. There is a growing need for remote trading terminals reflecting the confidence of traders in the use of

stable Internet Trading Systems.

LSE has improved the quality of operations and upgraded them to modern international standards. This has

included upgrading LSEs IT infrastructure, updating regulations and procedures to incorporate existing and

expected technological changes, as well as reorganizing and restructuring the workforce. As a result, LSEs

capabilities as both a front-line regulatory body and a service organization have been significantly enhanced.

LSE has successfully launched Unique Identification Number (UIN) System with an objective to bring more

efficiency and transparency to the stock business and to improve the surveillance and monitoring capacity of

the Exchange.


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Stock Exchage Working