Pakistan Stock Exchange

Introduction
Stock exchange term is used for a commercial centre where stock, shares and different
sorts of securities are purchased and sold. It is showcase where the proprietors may buy
or move/arrange off their securities according to certain very much characterized tenets
and controls (Lamba, 2003). Such securities incorporate offers and debentures issued by
listed organizations, securities and debentures issued by government, listed enterprises
and city and port trust Board of Directors. This paper briefly discussed the background,
functions, and important characteristics of Pakistan Stock Exchange (PSX).

1.1 Stock Exchange Functions and Capacity

The major functions of any stock exchange are listed below:
1. Constant Market: The essential capacity of stock exchanges is the formation of a
ceaseless market, where securities are purchased and sold in huge volume.
2 Assessing the cost of securities: The stock exchange gives system to assessing
the cost of securities. It checks the genuine worth of securities in the market.
3 Gauge of the economy: The cost of offers is the pointer of future monetary
circumstance in the nation.
4 Enables capital arrangement: To stock exchange help capital development in
the nation to vast degrees, as it builds up the propensity for sparing, putting and
hazard taking in the financial specialist.
5 Encourages speculation: Speculation is a critical piece of stock exchange tasks.
It empowers theorists to theorize and anchor sufficient benefit through variances
in security cost.
6 Legitimate use of capital: The stock exchange controls the stream of venture
from useless, unfruitful endeavour.
7 Gives wellbeing and security in managing: Stock exchange gives wellbeing,
security as exchanges are led according to the guidelines and directions.
8 Posting of securities: Listing implies acquiring the consent of stock exchange for
exchanging explicit securities.
 9 Official bank lending: Bank effectively know the costs of cited securities. They
can offer credit to financial specialists against such securities.

2. Pakistan Stock Exchange

The fundamental stock Exchange was participated in 1949 as an association Limited by
Guarantee. In light of demutualization, the Exchange stood corporatized and
demutualized as an open association confined by offers under the name of 'Karachi Stock
Exchange Limited', with effect from August 27, 2012. Thusly, the three stock exchanges
specifically Karachi Stock Exchange, Lahore Stock Exchange and Islamabad Stock
Exchange were facilitated into Pakistan Stock Exchange Limited (PSX) on January 11,
2016. It was broadcasted the "Best Performing Stock Market of the World for the year
2002", the position again re-affirmed by the Prime Minister of Pakistan in January 2015.
In any case, according to examination by Bloomberg, Pakistan situated third in 2014
among the Top Ten Best Performing Markets universally.

PSX gives a reliable, exact, fluid and successful digitized business focus where budgetary
authorities can buy and move recorded associations' normal stocks and distinctive
securities. For over 60 years, the Exchange has supported capital advancement, serving
an extensive variety of individuals, including individual and institutional budgetary
authorities, the trading system and recorded associations (Hamid, and Kozhich 2006).

Mission Statement
PSX contributes to the economic development of Pakistan by providing a fair,
transparent, and efficient marketplace to facilitate capital formation for the benefit of
investors, issuers and all stakeholders.
Vision
To be a leading financial institution, offering efficient, fair and transparent securities
market in the region and enjoying full confidence of the investors.
A brief history of the PSX
Established on September 18, 1947, Karachi Stock Exchange Limited (KSE) was the first
exchange in Pakistan. The Karachi Stock Exchange Limited (KSE), was a stock exchange
arranged at the Stock Exchange Building (SEB) on Stock Exchange Road, in the center
of Karachi's Business District, I. I. Chundrigar Road, Karachi in Sindh Province of
Pakistan (Uppal, 1998). An aggregate of 654 companies were listed on December 8, 2009
with a market capitalization of Rs. 8.561 trillion (US$120.5 billion) having recorded capital
of Rs. 2805.873 billion (US$40.615 billion). The KSE-100 Index close down at 11,967 on
May 16, 2011. Signify publicize capitalization of the PSX accomplished Rs 2.95 trillion
(US$35 billion generally) on July 30, 2011. As on July 10, 2015, mean exhibit
capitalization accomplished Rs. 7.33 trillion (US$72 billion generally). Currently,. The
stock exchange traded at 39000 index points and declined from the value of all time high
of 52876.46 in May of 2017 and a record low of 538.89 in June of 1990.

It is by and by participated in the Pakistan Stock Exchange close by the other two
exchanges of Pakistan, the Lahore Stock Exchange and the Islamabad Stock Exchange
(Bloomberg, 2013). It is Pakistan's greatest and a standout amongst the most prepared
stock exchange in South Asia by market capitalization, with various Pakistani consortium
and likewise abroad endeavors postings. In perspective of Bloomberg, the Pakistani
benchmark stock market of Karachi is the third-best performing exchange all around since
2009.

Additionally, in June 2015, Khaleej Times declared that since 2009, the Pakistani rupee
depreciates by 26 percent a year for US dollar theorists, making Karachi the best-
performing stock exchange internationally. With effect from January 11, 2016 the Karachi
Stock Exchange, Lahore Stock Exchange and Islamabad Stock Exchange were joined
under the Stock Exchanges (Corporatisation, Demutualization and Integration) Act, 2012
to shape the Pakistan Stock Exchange Limited as the principle stock exchange in
Pakistan. Markets Index to MSCI Emerging Markets Index with impact from June, 2017.
There are 559 organizations recorded till Jun 2017 with Market Capitalization of US $
72.3 billion (June 30, 2016).
 Functions of PSX
➢ to endeavour to give quality and esteem added administrations to the capital market
in a proficient, straightforward and systematic way, good with worldwide guidelines and
best practices.

➢ To give best in class innovation and robotized exchanging tasks, driven by a group
of experts as per great corporate administration.

➢ To ensure and protect the interests of every one of its partners i.e. individuals,
recorded organizations, representatives and speculators on the loose.

➢ To mirror the corporate part and nation's financial wellbeing and assume its job for
the development, advancement and success of Pakistan.

(b) Different markets in the stock exchange

Currently, the following seven indices are quoted in PSX, each has a distinct feature with
respect to regional markets.

❖ KSE 100

❖ KSE 30

❖ KSE All Share Index

❖ KMI 30

❖ PSX KMI All Shares Index

❖ Oil & Gas Sector

➢ Banking Sector

Major markets and sectors included in the above seven induces are as follows:
➢ Government Debt Securities Trading

➢ Real Estate Investment Trust REITs

➢ Capital Market Hub in Abbottabad

➢ Offices in Lahore and Islamabad

➢ Bond Market Index (Beta Version)

(c) Describe the difference between the markets

The most quoted index is the KSE-100. It comprises of the 100 largest companies on the
Stock Exchange and is updated minute by minute during trading hours. The index
reflecting all the companies on the Stock Exchange is the KSE-All Share Index and the
KSE-30 Index comprises of top 30 companies.

(d) In a table, set out the quantitative and qualitative criteria for companies to list
on the each of the markets
Qualitative criteria Quantitative criteria
On listing, the separation estimation The least paid up capital of the organization is
of the customary offers of the Rs. 10 million.
organization, properly affirmed by a
Chartered Accountant/Auditor will not
be not as much as its face value.
The offering record must be cleared The minimum IPO is Rs. 5 million or 25% of the
by the KSE before it is submitted to capital, whichever is higher.
the Securities Exchange
Commission of Pakistan for approval.
The Company will apply for A organization applying for posting on the OTC,
endorsement to the Exchange. will pay an underlying listing charge comparable
to 1/20 of 1% of the aggregate estimation of
Security
The organization will not be qualified The organization will pay, in regard of each
for listing under these controls if any monetary year of the Exchange, beginning from
 of its Director/Sponsor is a defaulter first July and completion on 30th June next, a
of any Stock Exchange and/or he is a yearly posting expense, which will be payable
Director in other by or before the 30th September in each
schedule year, according to the sections before
the 30th September in each calendar year, as
per the slabs
An organization applying for selection on the
Exchange will, notwithstanding different
charges, pay a whole of Rs. 50,000/ - (Rupees
fifty thousand just) as non-refundable
administration charges.

d) Conditions of Listing
The company shall comply with the following listing requirements (SECP, 2017):-
a) The Company will apply for endorsement to the Exchange. The application will contain
the names of the patrons of the organization, names of the chiefs of the Company.

b) The organization will not be qualified for posting under these controls if any of its
Director/Sponsor is a defaulter of any Stock Exchange and/or he is a Director in other
recorded organization which has abused and/or neglected to conform to any arrangement
of the Listing Regulations of the Exchange

c) A Company constrained by offers, with the underlying offer capital similarly distributed
to 200 starting individuals after mix is presently assigning offer capital to around 400
individuals

(e) Any other interesting information on the stock exchanges.

The disputes resolution process in PSX include the following elements
1. Friendly Settlement: Although the customer has the response to approach the
significant stock exchange, SECP or the Courts for hotel grievance, it is firmly exhorted
that the objection/issue should initially be 19 taken up specifically with the part. This won't
just spare the time devoured in correspondence and techniques however will likewise
protect the trust and certainty.
2. Discretion boards of trustees of Stock Exchanges: The customer likewise has the
option of taking up his/her grumbling with the administration of the concerned stock
exchange. All the stock exchanges have their own Arbitration Committees that investigate
the complaints/debate between the Investor and the Members.

3. SECP: The customer can likewise stop his/her dissension with the Vigilance Cell which
has been setup at SECP to guarantee that complaints/protests of the overall population
are heard and changed, in a brisk and productive way.

4. Common Courts: The customer can likewise document his/her protest with the Civil
Courts.
References
Hamid, H. H., and V. Kozhich (2006), 'Corporate Governess in an Emerging Market: A
Perspective on Pakistan', Journal of Legal Technology Risk Management 1: 22- 33.

Lamba, A. (2003), 'An Analysis of the Dynamic Relationships between South Asian and
Developed Equity Markets', Working Paper National Stock Exchange of India Research
Series.

Uppal, J. (1998), 'Stock Return Volatility in an Emerging Stock Market: A Case Study of
the Karachi Stock Exchange', Managerial Finance 24: 34-51.

World Bank (2015), ‘Corporate Governance Country Assessment for Pakistan’ Report on
the Observance of Standards and Codes (ROSC), The World Bank, Washington D.C.

SECP (2017). https://www.psx.com.pk/newsimage/93210-1.pdf