IN THE NAME OF ALLAH THE MOST BENEFICENT AND THE MOST MERIFUL

PRESENTED BY

1. Muhammad Jawad-ul-Hassan2. Noor Ullah

3. Waqas4. Benish Iftikhar

Basics of Stock Exchange

WHAT IS STOCK EXCHANGE?

Securities are bought and sold

Stock Market or Share Market

Conducted in systematic manner

Rules and regulations are followed

STOCK EXCHANGE IN PAKISTAN

Karachi Stock Exchange (KSE)

Lahore Stock Exchange (LSE)

Islamabad Stock Exchange (ISE)

KARACHI STOCK EXCHANGE

Located in Karachi, Sindh, Pakistan

Pakistan's largest and oldest stock exchange

Overseas listings

Currently located in the heart of Karachi's Business

district, off I.I. Chandigarh Road

Best Performing Stock Market of the World for year 2002

No Name of Companies No Name of Companies

1 Fauji Fertilier Company 14 Engro Corporation Limited

2 Siemens (Pakistan) Engineering Co. Ltd

15 JDW Sugar Mills Limited

3 Millat Tractors Limited 16 United Bank limited

4 Fauji Fertilizer Bin Qasim Ltd 17 MCB Bank limited

5 Unilever Pakistan Ltd 18 Gadoon Texttile Mills limited

6 Unilever Pakistan Foods Ltd 19 Rafhan Maize Products Company

7 Clariant Pakistan Ltd 20 Crescent Steel & Allied Production

8 Colgate Pakistan ltd 21 Pakistan State Oil Company limited

9 International industries Ltd 22 Bank Al Habib Limited

10 Security papers Ltd 23 Dawood Hercules Corporation Limited

11 Nestle Pakistan Ltd 24 The Hub Power Company limited

12 Pakistan petroleum Ltd 25 Al Ghazi Tractors Limited

13 Atlas battery LtdSource: KSE WEBSITE

KSE TOP COMPANIES 2010

KSE 100 INDEX

LAHORE STOCK EXCHANGE

LSE Pakistan's second largest stock exchange

It is located in Lahore, Pakistan

671 listed companies

Total capital of Rs. 555.67 billions

NASDAQ STOCK MARKET

• NASDAQ

• “NASDAQ” “National Association of Securities Dealers Automated Quotations”

• Second-largest stock exchange

• 2,711 listings

• Total capitalization of over $4.5 trillion

• More trading volume than any other electronic stock exchange in the world.

• The exchange is owned by NASDAQ OMX Group, which also owns the OMX stock exchange network.

Islamabad Stock Exchange (ISE)

o An Overview of ISE

ISLAMABAD STOCK EXCHANGE (ISE)

• History

• Vision

• Mission

BRIEF HISTORY OF ISE

VISION

To be the pre-eminent stock market in Pakistan and achieve market recognition both in terms of quality

and delivery of services

MISSION

Create value for investors and listed companies through dynamic market operations, fair and transparent business practices and effective

management

MANAGEMENT OF ISLAMABAD STOCK EXCHANGE (ISE)

BOARD OF DIRECTOR (ISE)

Zahid Latif Khan

Directors

Farrukh Younas Khan Mohammad Masud Ch. Fateh Khan Malik

Umar Hayat Khan Muhammad Sewhani Hussain Ahmed Ozgen Rashid Akhtar

CAREERS

• Main Objective is

– setting up of a trading and settlement infrastructure

– information system,

– skilled resources

– accessibility and a fair and orderly market place

FINANCIAL HIGHLIGHTS OF ISE

FINANCIAL HIGHLIGHTS

MARKET PERFORMANCE

BROKERS IN ISLAMABAD STOCK EXCHANGE

1. Kausar Securities (Pvt) Ltd

2. Riaz Ahmed Securites (Pvt) Ltd

3. Pasha Securites (Pvt) Ltd

4. Falki Capital (Pvt) Ltd

5. Fair Edge Secuirites (Pvt) Ltd

6. CMA Securites (Pvt) Ltd

7. Mian Muhammad Akran Securities

8. Excel Securites (Pvt) Ltd

9. Beaming Securites (Pvt) Ltd

10. Progressive Investment (Pvt) Ltd

11. Faith Securites (Pvt) Ltd

12. SAL Securites (Pvt) Ltd

13. SAL Securites (Pvt) Ltd

14. YS Stocks (Pvt) Ltd

15. PACE Investment and Securities

16. Islamabad Securities (Pvt) Ltd

17. AAA Securities (Pvt) Ltd

18. Malik Securities (Pvt) Ltd

19. Zahid Latif Khan Securities (Pvt) Ltd

20. G.R. Securities (Pvt) Ltd

21. First Fidelity Leasing Modarba

22. Fair Deal Securities (Pvt) Ltd

23. Tariq Sayeed Securities (Pvt) Ltd

24. Abbasi Securities (Pvt) Ltd

FUNCTIONS OF STOCK EXCHANGE

• Raising Capital for Business

• Facilitating company growth

• Corporate governance

• Efficiently and fairly

• Investment opportunities for small investors

• & many more…

THANK YOU… ;) ;) ;)Any Questions up till here… ???

STOCK EXCHANGE AND ECONOMY

CRITERIA FOR INDIVIDUAL MEMBERSHIP

• He/She is less than 21 years of age

• He/She is not a citizen of Pakistan

• He/She has been adjudicated a Bankrupt

• He/She is a defaulter of Stock Exchange or Trade Association in Pakistan

No person would be Member of ISE if

Structure Regulatory

REGULATOR OF STOCK MARKET

• Security and Exchange Commission of Pakistan (SECP)

ELEMENTS OF STOCK EXCHANGE

There are three elements of stock exchange

1) Members 2) Security3) Trading floor

Members:

• 121 Members• Requirement for members Must be graduate Membership fee Members can appoint 8 agents

SECURITIES

1)

• COMMON STOCK

2)

• PREFERRED STOCK

3)

• DERIVATIVES

SHARES

‘’Represent ownership in part of a company’’

INFORMATION ON SHARE

•Name of the company•Total issued capital•Shareholder’s name•Certifies number•Distinctive number

Shares bought & sold can be transferred as well.Stamp of 1.375% on the face value of share,

16 RS Stamp on each share.

Applications are invited• Shares are issued within 45 days• And the shares are issued in following ways !

At Par value Discount Premium

In case of Over Subscription Balloting is done Issue the shares to successful candidates and refund the application amount to the others

PROCESS OF BUYING OF SHARES

TRADING FLOOR

• A place where buyers & sellers get in touchwith each other

• Trade has to be carried out in prescribed time

FLUCTUATIONS IN SHARE PRICE

• Company’s financial plan

• Economical condition of a company

• Condition of stock market

• Company production consumption

• Company administration

• International condition

• Internal rate

• Exchange rate

RULES TO BE FOLLOWED BY SECP IN STOCK EXCHANGE

• Securities and Exchange Ordinance 1969

• Securities and Exchange Rules 1971

• Securities and Exchange Commission of Pakistan Act 1997

• Specific Purpose Legislations for Conduct of Trade

• Stock Exchange’s Regulations:

• Memorandum & Articles of Association

• Listing Regulations

• General Regulations

STRUCTURE OF STOCK EXCHANGE

• Affairs of exchange are run by the board of directors

• Composition of the Board:

– Elected from Members of the Exchange 5

– Nominated by SECP 4

– The Managing Director 1

– Total 10

• Managing director is a member of the board by virtue ofhis office

• The chairman of the board is elected out of the non-member directors

SOURCES OF REVENUE FOR ISE

• Initial listing fee @.1% of total paid-up capital maximum upto Rs.1.00 million

• Annual Listing FeePaid-up Capital

Upto Rs. 50 mn Rs. 10,000/- P.A.Above Rs. 50 mn to Rs. 200 mn Rs. 15,000/- P.A.Above Rs. 200 mn Rs. 25,000/- P.A.

• Additional Listing Fee @ 0.1% of the increased capitalTrading Fee @ 0.0015% - Rs.1.50 per Rs.100,000 value of transactionAny Other Income Source

LISTING FEES: -

• Broker information

1)

• Execution

2)• Settlement

3)

SELECTING A BROKER

COMMISSION

3)

ROLE OF SECP IN ISLAMABAD STOCK EXCHANGE

• SECP registers brokers and Brokerage houses

• SECP registers stock exchange

• SECP provides rules and regulations

• SME division in SECP takes care of matters related to CDC and legislation about ISE

CREATING BUSINESS VALUE THROUGH TECHNOLOGY

• IT Department of ISE

ORGANIZATIONAL STRUCTURE

STAKEHOLDERS OF ISE

• MEMBERS

– ISE has 119 members/brokers• 26 Individual

• 93 Corporate

– Pakistani Citizen

– Having Certain taxable income

– Graduate

– Non Defaulter of any public institution

• ISSUERS

– 261 Companies are listed

– 200 Million Paid-up capital

– Public Offer should be Rs.100 million or 20 percentof capital whichever is high

– 500 Applicants

• INVESTORS

– ISE has a very small base of investors as compare to other exchange

DIFFERENT OPERATIONS OF ISE

• COMPANIES AFFAIRS:

– Providing listing to Companies

– Monitor Listed Companies

– Provide Quotations to Media

• INTERNAL CONTROL:

– Membership to brokers

– Control Members

– Monitor Computerized trading

• INVESTORS RELATION:

– Information to investor

– Complaints of investors

– Educate Investors

– Handle Different cases

WHAT ARE THE TRADING SYSTEM ?

• Computerized Trading Systems

• Software used for Trading System

• Online Trading

INVESTOR’S EDUCATION STEP BY ISE

• Backbone of the stock market

• Safeguard the interest of the investing public

• Other knowledge about Stock Exchange

• Through Website

• Arrangement of presentations/briefings to the general public

• Publishing the research papers about the capital market.

• For good and fast transactions

• & many more

PROCEDURE FOR TRADING IN ISE

STOCK MARKET INDEX

• KSE-100 Index

• LSE-25 index

• ISE-10 Index

• Mathematical Formula Used

BANKERS INVOLVED IN STOCK EXCHANGE

• MCB Bank Limited

• Faysal Bank Limited

• NIB Bank Limited

• Askari Bank Limited

• SME Bank Limited

• Summit Bank Limited

• Allied Bank Limited

• Citibank

• Silk Bank Limited

• Bank Alfalah Limited

• United Bank Limited

SEGMENTATION OF CAPITAL MARKET

1- PRIMARY MARKET

2- SECONDARY MARKET

PRIMARY MARKET

• IPO (Initial Public Offering)

– It can be done in two ways

Initial Public Offering

Private Placement

General Public Subscription

GENERAL PUBLIC SUBSCRIPTION

General Public Subscription

Appointment of Underwriter

Directly by Company

DIRECTLY BY COMPANY

Prospectus

Contents of Prospectus

Capital Structure

Authorized Capital

Paid-up Capital

Subscribed Capital

APPOINTING AN UNDERWRITER

• Underwriters all over the world purchase all shares

• Underwriters’ spread

• Commission

• Appointing is not legally required

• Surety for subscription of all shares

ACCOUNT OPENING

• Account opening form is a contract

• According to its term & condition members buy &sell shares on the order given by the investors

• Account can be managed by

Visiting broker

Through call service

online management

TERMS AND CONDITION

1) The investor will himself contact the members or his agent or staff to giveguideline on buying & selling of shares

2) Members will not give any guarantee for the execution of all the orders

3) For the selling of shares investors must deposit the shares to members otherwise order will not be executed

4) For placing buying orders investors have to deposit a minimum amount called margin

5) Investor can get this account statement for every week

6) The investor cannot claim the member if the shares are lost or destroyed due to any accident

7) The stock exchange manage will settle any dispute arising among members & investors

ONLINE ACCOUNT OPENING AND HANDLING

• Direct selling or buying is not allowed in ISE so asother selling/buying operations

• Online trade is also done through brokerage houses.

TWO TRENDS

BEARISH BULLISH

PRICE EARNING RATIO

• P.E Ratio:

Price earning ratio of those shares will be high whose earning per share ratio will be less.

Calculation!

• P.E Ratio= Market price per share

Earning per share

MARKET CAPITALIZATION

VISITS OF EDUCATIONAL INSTITUTES

A WORLD OF ADVICE FOR YOU PEOPLE

1. Understand the nature of Stock Investment before making any investment decision.2. Always Invest Through a Registered Broker of the exchange.3. Diversify your investment to a possible extent.4. Keep Complete record of your Investments.5. Maintain your own CDC account for the safe custody of your shares.6. The key to making money in stocks is not to get scared out of them.

QUOTE BY MARKET GURU

Warren Buffet

• Only buy something that you’d be perfectly happy to hold if the market

shut down for 10 years.

;) . . . . . ;) . . . . . ;)