Académique Documents
Professionnel Documents
Culture Documents
Assignment on
THE KARACHI STOCK EXCHANGE
III
Department of Management
Sciences,
Abdul Wali Khan University,
Mardan
TABLE OF CONTENTS
10
10
11
ix.
12
x.
13
xi.
14
16
18
19
xv.
20
xvi. Conclusion
24
xvii. References
25
HISTORY
In 11th century people of franc were concerned with managing and regulating debt of agriculture
communities on behalf of the bank. As these men also traded in debts, they could be called the
first brokers
While some stories suggest that the origin of stock exchanges were the Bruges bourses, they
were the houses of investors. The bourse comes from a Latin word bursa meaning a bag ,
because in 13th century Bruges were the sign of a parse or perhaps three parses hug on the front
of the house where merchants met. Later in 13th century commodity traded in Bruges gathered
inside the house of a man called Van der burse and in 1309 the institutionalized this and
became a place for a formal meeting of merchants these were the Bruges bourse
In the middle of 13th century, Venetian bankers began to trade in government securities. In 1351
the Venetian government outlawed spreading rumors intended to lower the price of government
funds. There were people in Pisa, Verona, Geneva 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
The Dutch later started joint stock companies, which let shareholders invest in business ventures
and get a share of their profits - or 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.
There were some economic activities in the world which show the need of stock
exchange in the world, given below
These are some major issues which lead to establish a Stock Exchange in the
economy
KSE contain 4 Indexes today (KSE all share index, KSE 100 Index, KSE 30 Index and
KMI 30Index)
VISION
To be a leading financial institution, offering efficient, fair and transparent
securities market in the region and enjoying full confidence of the investors.
Mission
To strive to provide quality and value-added services to the capital market
in an efficient, transparent and orderly manner, compatible with
international standards and best practices
AND
To provide state-of-the-art technology and automated trading operations,
driven by a team of professionals in accordance with good corporate
governance
AND
To protect and safeguard the interests of all its stakeholders, i.e. members,
listed companies, employees and the investors at large.
AND
To reflect the countrys economic health and behavior and play its role for
the growth, development and prosperity of Pakistan.
10
11
Liquidity
Transparency in dealing
The minimum public offering is Rs. 5 million or 25% of the capital, whichever is higher.
At the time of listing, the break-up value of the ordinary shares of the company, duly
certified by a Chartered Accountant / Auditor shall not be less than its face value.
The offering document has to be cleared by the KSE before it is submitted to the
Securities Exchange Commission of Pakistan for approval.
12
The company shall not be eligible for listing under these regulations if any of its Director
/ Sponsor is a defaulter of any Stock Exchange and / or he is a Director in other listed
company which has violated and / or failed to comply with any provision of the Listing
Regulations of the Exchange and/or has defaulted in the payment of the loans of any bank
or financial institution or government dues, unless the same are legitimately disputed by
him by litigation.
I.
A company applying for listing on the OTC shall pay an initial listing fee equivalent to
one twentieth of one percent of the total value of Security.
II.
A company shall pay, in respect of each financial year of the Exchange, Which starts from 1 st
July and ending on 30th June next, an annual listing fee, which shall be payable by or before the
30th September in each calendar year, as per the slabs of fee applicable to debt instruments.
A company applying for enlistment on the Exchange shall, in addition to other fees, pay a sum of
Rs. 50,000/- (Rupees fifty thousand only) as non-refundable service charges.
13
Stocks / Shares
When we participate in the ownership of the business and have an equitable right in the business to the
extent of our share in it, we become an equity or share holder. An equity investor is entitled to
distribution of profits and in the event the business is liquidated at some stage, he is entitled to his share
of the net assets left over. Stock or share, as an equity instrument represents ownership interest of the
holders in their corporate ventures.
Bonds
Bond as a debt instrument represents the promise of an issuer to pay a fixed sum of money at a specified
maturity date and fixed return at regular intervals until then. At Stock Exchange, most of the trades are
made in equity instruments, i.e. stocks or shares issued by various companies.
14
Spot/T+1 Transaction:
Spot transactions imply delivery upon payment. Normally in spot transactions the trade is settled
within 24 hours.
Futures Contract:
A Futures contract involves purchase and sale of securities at some future date (normally within
one calendar month), at a price fixed today. The number and names of companies to be traded on
15
the Futures counter are determined every six months based on the eligibility criteria approved by
the SECP in this regard and which are notified to the market participants in advance.
COT Market:
Equity repurchase transactions, better known, as Badla are called Carryover trades. These are
an established form of transactions used in the stock market for temporary financing of trades by
speculators and jobbers. Through this mechanism, the purchase transaction, after its execution, is
funded through borrowing till the next day of settlement. At KSE, COT session is run in the
afternoon, to provide an efficient forum to investors and financiers. All carry over transactions
are done f or a period of 10 trading days, during which financee may release COT on any day
before completion of 10 days period, whereas financier will be able to release COT only after
completion of that period.
16
exchanges. Within the CDS, transfer of shares from one account to another account takes place
electronically. The CDS is managed by the Central Depositor y Company of Pakistan
Limited(CDC), which has been sponsored by the stock exchanges and leading local and
foreign financial institutions . Established under the Central Depositories Act, 1997, CDC has
emerged from an elementary settlement agency to full f ledged depository. It has
revolutionalized the financial market by making trading and settlement of securities transparent,
reliable, efficient and secure in eliminating risks.
Following are the core advantages of the CDS:
Electronic book entry system
Records and transfers securities electronically.
No physical change of hands of securities.
Strict confidentiality
No risk of damaged, lost, forged and duplicate securities.
Simple procedure involved in pledging of securities.
No delays in deliver y, settlement and transfer of securities due to speed.
Instantaneous credit of entitlements (Bonus, Paid Rights, etc.) to investors.
Significantly reduced the cost of investors.
17
An investor can use any of the three types of CDC accounts, which are described as below with
their features:
Sub-Account:
A broker may open, maintain and operate any number of sub-accounts he requires on behalf of hi
s clients. A specific sub-account is used for keeping securities belonging individually to that
particular client of the broker.
Investor Account:
By opening an investor account with CDC, the client comes with direct contact of CDC. Such
account can only be operated by the relevant account holder. The service provides efficient,
effective and secure services to its clients.
Out of the above, the most secured and convenient type is the investor account which is
highly recommended to the investors.
18
has been registered as a separate legal entity. The operations of NCSS are rapidly gaining
momentum and so far a majority of the securities have been inducted into the system for
settlement purpose.
NCSS provides stability to the market by capping the systematic risk to a good extent. It has also
improved efficiency of the settlement process by introducing a consolidated and geographical
neutral clearing and settlement system.
19
Previous Highest
25261.14 26046.71
Lowest
538.89
Forecast
25925.55
2014-02
Dates
1990
-2014
http://www.tradingeconomics.com/pakistan/indicators
Units
Index
Points
20
21
2008-
2009
Total Listed
651
2012-13
(up to March)
652
639
591
companies
571
New companies
44.95
111.83
31.04
115.1
listed
Fund mobilized(Rs.
21.1
in billion)
Total Listed Capital
1106510.0
4609928.61
(Rs. in millions)
Total Market
Capitalization
Total Shares Volume
28,332.78
42,959.12
28,018.14
38,100.00
34,650.00
115.64
172.53
111.63
150.00
190.00
(Million)
Average Daily Share
volume
(million)
Source: finance.gov.pk/survey/chapters_13/06-Capital%20Markets
Source: Karachi Stock Exchange
The closing level of KSE 100-index as on end May, 2013 stood at 21,823.05 (the highest level of
eleven months) registering a growth of 58.1 percent as compared to July 01, 2012 where index
stood at 13,801.41 points.
22
KSE
Market
Turnover
Index
Capitalization of shares
(end
(Rs. Billion)
(billion)
month)
12,190.37
3,247.7
1.2
14,577.00
3,797.3
2.0
July
11,070.58
2,938.0
1.0
15,391.58
4,051.1
2.8
August
11,761.97
3,125.8
1.4
15,444.82
4,090.7
2.8
September
11,868.88
3,119.1
1.8
15,910.11
4,307.8
2.6
October
11,532.83
3,022.6
0.9
16,573.86
4,375.9
4.5
November
11,347.66
2,960.1
0.8
16,905.33
4,468.1
3.3
December
11,874.89
3,046.0
1.6
17,242.74
4,647.3
3.5
January
12,877.88
3,317.7
3.9
18,173.67
4,609.9
5.4
February
13,761.76
3,501.8
7.0
18,043.31
4,609.9
5.1
March
13,990.38
3,548.9
6.6
18,982.42
4,819.6
3.9
April
13,786.62
3,502.0
4.3
21,823.05
5,502.2
May
13,801.41
3,493.3
1.7
June
http://finance.gov.pk/survey/chapters_13/06-Capital%20Markets
Months
KSE Index
Market
(end month) Capitalization
(Rs. Billion)
2012-2013
Turnover
of shares
(billion)
23
24
CONCLUSION
From the data contributed for this assignment it is concluded that Stock Exchange was basicall
depend on the ideas as far of 11 century, where some people were concerned with managing and
regulating debt of agriculture communities on behalf of the bank and are called the brokers. And
from the house of Merchants called Ven Der Burse which was introduced later on 13 century.
The Karachi Stock Exchange was for the first time started with a very few compnies and have a
limited paid up capital of PKR 37 million but with a hard struggle it grows up to 53.3 billions of
dollars and a computerised trading system with 1850 trading terminals and was declared to be
the Best Performing Stock Market of the World for the year 2002.
The Stock Exchange has a main role in economy because it mobilize money, contribute capital
etc
The importance of Karachi Stock Exchange in Pakistan can also be highlighted just through its
tax contribution which is PKR 4 million.
The Karachi Stock Exchange Provide a flexible listing regulations through which a company can
easily listed if he want and in the near future Karachi Stock Exchange provide soft listed
regulations for the very new introduced companies so that they increase their capital because
stock Market is an easy way to grow up the capital.
In stock exchanges normally only equity securities are traded but in Karachi Stock Exchange the
debt securities are also trade i.e. bonds because in Pakistan there are only five companies who
can issue bonds ad due to the absence of debt market the debt securities are also traded in
Karachi Stock Market.
The Karachi Stock Market also provide a different markets for its customers so that they can
easily trade through stock exchange, and for online security service, provide different types of
accounts.
25
References
I conclude data from different sites and books randomly and the assignment is not
dependent on a single site some of which are given below
http://www.kse.com.pk/
http://en.wikipedia.org/wiki/Stock_exchange
http://books.google.com.pk/books?id=PngG5YhPh1sC&pg=PA101&dq=stock+exchange+history&hl=e
n&sa=X&ei=yuTIUr64GqWAywOhqYCwCg&ved=0CFkQ6AEwCQ#v=onepage&q=stock%20exchange
%20history&f=false
http://ksestocks.com/HistoryHighLow
http://www.ksestocks.com/AboutKSE
http://ali786pk.blogspot.com/2009/05/ntroduction-of-karachi-sitock.html
http://www.slideshare.net/Vivek.iba/stock-market-presentation-812901?from_search=5
http://www.tradingeconomics.com/pakistan/indicators
http://books.google.com.pk/books?id=ih0DF71OGz8C&pg=PA15&dq=karachi+stock
+exchange+trade+calculation&hl=en&sa=X&ei=xDnKUuvIAY7EsASc4oGQDg&ved
=0CDUQ6AEwAg#v=onepage&q=karachi%20stock%20exchange%20trade%20calcul
ation&f=false