Project on Lahore Stock Exchange

HISTORY

 

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 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 of Lahore 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.

 

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.
  
• 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. LSE's 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 LSE's IT infrastructure, updating regulations and procedures to incorporate existing and expected technological changes, as well as reorganizing and restructuring the workforce. As a result, LSE's 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.
  
• LSE has implemented a regular timetable for the Broker System Audit, in order to build investors' confidence. Also, LSE has taken effective risk and exposure management measures including the implementation of a fully automated in-house developed Trade Risk Filter (TRF) to efficiently monitor members' pre-trading exposures on a real time basis. This has been a quantum leap for LSE in improving its risk management systems.
  
• A visible trend at the LSE has been the increasing number of corporate members. It is heartening to note that part of this increase has been due to the entry of investment banks/financial institutions (or their subsidiaries) as members of the Exchange. An overview of this trend over the past years is as follows
  

 

LSE's MEMBERSHIP STRUCTURE:

 

Year	Corporate Members				Individual Members	Total
	Private Limited Companies	Public Limited Companies		Banks or their Subsidiaries
		Listed	Un-Listed
2000	22	3	5	3	118	151
2001	28	3	6	3	111	151
2002	34	4	4	4	105	151
2003	37	4	5	4	101	151
2004	44	5	5	5	93	152
2005	46	4	5	6	91	152
2006	78	3	7	7	57	152
2007*	81	4	6

 *As of May 31st, 2007

 

• The above trend has led to record trading volumes as well as an improved product offering. The measures at LSE have attempted to create an atmosphere, which is more conducive and transparent for investment. The investing public has received the reforms very positively.
  
• LSE Training Institute specifically dedicated to the Capital Markets, is the first of its kind in Pakistan and was established in 2006. Formal courses have been introduced to provide trained human resources for the capital markets. It has also launched a series of Education Programs with a view to educate the brokers, agents and general public about the securities market and its laws. In an effort to promote the education sector, particularly in relation to financial markets, LSE is providing scholarships to deserving students of Lahore University of Management Sciences (LUMS). LSE encourages universities and colleges to come and visit LSE.
  
• In another trend-setting example, Lahore Stock Exchange and Islamabad Stock Exchange have joined hands to establish a Unified Trading Platform which will help to bring increased liquidity in the market, improve price discovery, maximize transparency, increase turnover, broaden investor base, curtail risks and distortions in trade, provide cost effective service to the investing public and enhance the image of both the Exchanges.
  
• As part of second generation capital market reforms being pursued by the Securities & Exchange Commission of Pakistan, demutualization is being seriously considered by the members of the exchanges and hopefully that during the year 2007 a decision will be taken in the best interest of the capital markets of the country. Demutualization is in line with international standards, which will ensure that the exchange truly and fairly represents the interests of all stakeholders
  

Lahore Stock Exchange has recently taken significant measures to facilitate trading through Internet. Latest figures show that the volume generated from Internet terminals have grown to 40 percent of total LSE volume.

 

According to a press release issued on Wednesday, 25 percent of total numbers of LSE trading terminals are being operated through the Internet. Available bandwidth has been increased by 6 times; internet trading terminal cost has been reduced; multiple ISP arrangements to increase availability; enhanced trading software security; facility for the members to view their clearing data through the Internet; provision of View Only Terminals (VOT) through LSE website www.lahorestock.com; over 180 VOTs active throughout Pakistan; hardware enhancement including installation of latest high-speed servers; backup dialup lines for contingency in case of loss of Internet connectivity; addition of ?Discussion Groups? To LSE?s website where users can discuss their problems and solutions on various issues.

 

LSE was the first exchange in Pakistan to move Electronic Trading in 1996 and the first to offer Internet Trading in 2001. It has had the honour of Chairing the IT Committee of Federation of Euro Asian Stock Exchanges and South Asian Federation of Exchanges.

Glossary Of Stock Market Terms:

Bear – an investor who anticipates a falling market and, therefore, sells the security in the hope of buying it back at a lower price.

Blue Chip – A large well-established company with a history of profitable operation

Bonds – Fixed-income securities, which entitle the holder to a pre-determined return during their life and repayment of principal at maturity.

Bull – An investor who anticipates a rising market and, therefore, buys the security in the hope of selling it later at a higher price.

Capital Gains Tax – Tax payable on profit arising from appreciation in value of investment, realized at the time of selling or maturity of investment.

Carry-over Trades – Equity repurchase transactions, better known, as "Badla"; these are an established form of transactions used in the stock market for temporary financing of trades by speculators and jobbers.

Dividend – That part of a company's profits which is distributed among shareholders, usually expressed in rupee per share or percentage to paid up capital.

Earnings per share (EPS) – A profitability indicator calculated by dividing the earnings available to common stockholders during a period by the average number of shares actually outstanding at the end of that period.

Equity – The owners' interest in a company's capital, usually referred to by ordinary shares

Floatation – The occasion when a company's shares are offered on the stock market for the first time.

Fund managers – A company, which invests and manages investors' money, with the aim of maximizing capital growth

Initial Public Offering (IPO) – The offering of equity shares of a company to the general public for the first time.

Insider trading – The purchase or sale of shares by someone who possesses 'inside' information on a company's performance which information has not been made available to the market and which might affect the share price. In Pakistan, such deals are a criminal offence.

Investment companies – A company, which issues shares and uses its capital to buy securities and shares in other companies.

Listed company – A company whose securities are admitted for listing on a stock exchange.

Long position - When an individual purchases securities of a company he is said to have a long position in the company's shares. For example an owner of shares in PTCL is said to be "long PTCL" or "has a long position in PTCL." If you are long, you would like the share price to go up.

Market capitalization – The total value of a company's equity capital at the current market price.

Nominee – A person or company holding securities on behalf of others, but who is not the owner of such securities.

Option – The right (but not the obligation) to buy or sell securities at a fixed price within a specified period.

Ordinary shares – The most common form of shares, which entitle the owners to jointly own the company. Holders may receive dividends depending on profitability of the company and recommendation of directors.

Portfolio – A collection of investments

Price/earning ratio (P/E ratio) – The P/E ratio is a measure of the level of confidence (rightly or wrongly) investors has in a company. It is calculated by dividing the current share price by the last published earnings per share.

Primary market – Where a company issues new shares, either for the first time, or at the time of issuing additional securities.

Privatization – Conversion of a state-owned company to a public limited company (plc) status.

Private company – A company that is not a public company and which is not allowed to offer its shares to the general public.

Public limited company (plc) – A company whose shares are offered to the general public and traded freely on the open market and whose share capital is not less than a statutory minimum.

Rights Issue – The issue of additional shares to existing shareholders when companies want to raise more capital.

Securities – A broad term for shares, corporate bonds or any other form of paper investment in capital market instruments.

Settlement – Once a deal has been made, the settlement process transfers stock from seller to buyer and arranges the corresponding exchange of money between buyer and seller.

Short Selling- The act of borrowing stock to sell with the expectation of price reduction with the intention of buying it back at a cheaper price.

Stockbroker – A member of the stock exchange who deals in shares for clients and advises on investment decisions.

Stock Market – The market place where shares of publicly listed companies are bought and sold.

Unit trust – An open-ended mutual fund that invests funds in securities and issues units for sale to the public. It can repurchase these units at any time.

Yield – The aggregate return earned on an investment taking into account the dividend/interest income and its present capital value

 

 

LSE's BOARD OF DIRECTORS-2008

 

Mr. Arif Saeed: Chairman

Mr. Ibrar A. Mumtaz

Mr. Sikandar Mustafa Khan

Mr. Walid Iqbal

Mr. Asif Baig Mirza

Mr. Gul A. Dhami

Dr. Arslan Razaque

Mr. Ammar-ul-Haq

Mr. Muhammad Nadeem Ejaz

Mian Shakeel Aslam: Managing Director

 

 

 

 

Lahore Stock Exchange (Guarantee) Ltd. leaders in the software development for stock brokers and stock exchanges has yet again come forward with a solution, which can enable brokers meet their growing business

Experience designed & developed keeping in mind the market trends and the Stock Brokers needs People within Pakistan and abroad see a great potential in the Pakistani bourses. Pakistani stock brokers need to keep pace with this rapidly growing demand.

This is the high time for brokers to get ready for future expansion. As technology drives the business therefore use of the modern technology and state of the art solutions can take brokers a long way in this direction by providing security of data, ease of operations, a customer oriented approach and much more needs.

 

News Letters:

Monthly Newsletter is prepared by the Research & Investor Education Department of Lahore Stock Exchange. The newsletter provides an overview of activities of previous month.

 

Rules & Regulations:

LSE, being a self regulatory organization has its own sets of rules and regulations to regulate its various activities including listing of companies/ securities on its ready board quotation, supervision of member firms to enforce compliance with financial and operational requirements, periodic checks on broker's sales practices, and the continuous monitoring and surveillance of their trade operations.

 

 

 

Investor Guide

 

Introduction:

Everyone today appreciates the need to save whether for a house, for children's education, a wedding, or for use after retirement. All these goals can be realized through excellent financial planning. An intelligent plan entails investing your money in an appropriate combination of assets with potential to generate the income needed to achieve your goals. If you invest wisely, you can maximize the earning on your investments.

There
are many investment avenues available, but a wise investor does not invest on impulse, a hot tip or follow the herd. An investor should discriminate between information, casting away irrelevant and illogical pieces of information, and checking for opportunities and facts before making an intelligent choice of investments

 

 

 

What Is The Stock Exchange?

The stock exchange provides a market place where shares can be bought and sold.

• What is the Role of the Stock Exchange?
  
  • The stock exchange admits companies for trading at their securities.
    
  • It provides a market for raising capital by companies.
    
  • It provides a market place for shares of listed public companies to be bought and sold, by bringing companies and investors together at one place.
    
  • The exchange's role is to monitor the market to ensure that it is working efficiently, fairly and transparently.
    
• Stock Exchanges in Pakistan:
  
  There are three stock exchanges in Pakistan:
  
  • Karachi Stock Exchange (Guarantee) Ltd.
    
  • Lahore Stock Exchange (Guarantee) Ltd.
    
  • Islamabad Stock Exchange (Guarantee) Ltd.
    

  Of these, Karachi Stock Exchange is the biggest exchange in the country.
  

• Trading and Settlement:
  
  The stock exchanges have introduced a computerized trading system to provide a fair, transparent, efficient and cost effective market mechanism to facilitate the investors.
  
  The trading system comprises of four distinct segments, which are:
  
  • T+3 Settlement System;
    
  • Provisionally Listed Counter;
    
  • Spot Transactions; and
    
  • Futures Contracts.
    
• T+3 Settlement System:
  
  • In the T+3 settlement system, purchase and sale of securities is netted and the balance is settled on the third day following the day of trade.
    
• Benefits of T+3 Settlement System:
  
  • It reduces the time between execution and settlement of trades, which in turn reduces the market risk.
    
  • It reduces settlement risk, as the settlement cycle is shorter.
    
• Provisionally Listed Counter:
  
  • The shares of companies, which make a minimum public offering of Rs.100 million, are traded on this segment from the date of publication of offering documents When the company completes the process of dispatch/credit of allotted shares to subscribers, through CDC it is officially listed and placed on the T+3 counter. Trading on the provisionally listed counter then comes to an end and all the outstanding transactions are transferred to the T+3 counter with effect from the date of official listing.
    
• Spot/T+1 Transactions:
  
  • 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 a financial or tangible asset at some future date, at a price fixed today.
    

 

What Are Shares?

Each
share represents a small stake in the equity of a company. You can buy large or small lots to match the amount of money you want to invest. A company's share price can rise or fall as a result of its own performance or market conditions.

Once the shares are brought and transferred in your name your name will be entered in the company's share register, which will entitle you to receive all the benefits of share ownership including the rights to receive dividends, to vote at the company's general meetings to receive the company's reports.

If
you decide to sell your shares you will need to deliver share certificates to the broker in time for the transaction to be completed.

With the introduction of the Central Depository System (CDS), an investor can have shares in paper form or can own shares in an electronic book- entry form at the Central Depository Company (CDC).

• Why Do Companies Issue Shares?
  
  Companies issue shares to raise money from investors. This money is used for the development and growth of businesses of companies.
  A Company can issue different types of shares such as ordinary shares, preference shares, shares without voting rights or any other shares as are permissible under the law. These give shareholders a stake in the company's equity as well as a share in its profits, in the form of dividends, and a voting right at general meetings of shareholders.
  
• Why Do Investors Buy Shares?
  
  Studies have shown that over a twenty-year span, investment in shares has provided greater returns than most other forms of savings. Shares can provide you with a regular stream of income through dividends as well as the potential for your investments to grow in value. If the prices of shares go up, you can sell them for more than you paid. This is called capital gain.
  
• What are Dividends?
  
  Dividends are returns paid to shareholders out of the profits of the company. Returns can be in the form of cash or additional shares of the company called bonus shares. Dividends are usually paid once or twice a year depending upon the company's profit distribution policy.
  

 

• What is Capital Growth?
  
  This is one of the ways in which shares differ from deposit accounts. The principal amount of money you put in a bank or any fixed income savings scheme always stays the same e.g. if you start with Rs.100,000 you will always have Rs.100,000 (other than any interest earned).changes in value according to the performance of the company. With good management, the value of your investment in shares of a company can grow over time so that your shares are worth more than you paid for them. This is capital growth.
  
• Risks And Rewards:
  
  Buying shares can offer advantages over saving in deposit accounts: your investment may increase in value besides paying you dividends. You share the rewards when the company does well and the price of the shares goes up. But if the company performs badly, the share price may go down and the value of your investment will be reduced. Other factors, such as the performance of the stock market as a whole and the general economic climate, may also affect the price of your shares. Investment in shares is therefore investment in 'risk capital'. The shareholders can be rewarded for taking this risk and the potential return on your money can be higher than that on other investments. You can reduce your risks with careful planning.
  

Tips for Investing Wisely

• Know What Investment Products are Available:
  The following types of securities are available on the stock market for investment:
  
  • Ordinary shares of listed companies
    
  • Unit trust schemes
    
  • Mutual funds certificates
    
  • Corporate bonds i.e., Term Finance Certificates (TFCs)
    
  • Government securities i.e., Federal Investment Bonds(FIBs), Pakistan Investment Bond (PIBs) and Special US Dollar Bonds.
    
• Know Your Investment Profile:
  A wise investor chooses an investment product not only according to his goals and the amount of capital available but also according to his tolerance for risk. All investments carry a certain degree of risk. You have to determine whether you are a "risk-taker" or a "risk-averse" person. Depending on the extent of risk you intend to take, you should pursue an investment strategy (aggressive, moderate or conservative) that fits your risk profile.
  
• Do Your Homework Before You Invest:
  Don't put in your money until you have understood all relevant informationregarding the investment.
  Prepare yourself for the vigorous homework of analyzing company's annual reports, accounts and other statements while keeping abreast of what's happening in the industry, country and elsewhere that may affect your investment. Consult your investment adviser/broker to get latest market information about shares you intend to buy or sell. Be skeptical of any thing picked up from rumors, particularly if you cannot rationally explain their choice.
  
• Think Long-term:
  Bear in mind that even in the best of securities/shares, there can be short-term aberrations. It is important to have the power to hold your investments for longer periods. Studies have shown that investments properly timed and based on strong fundamentals have been very profitable for investors in the longer term.
  
• Avoid Putting All Your Eggs In One Basket:
  
  The best way to minimize risk is to diversify your investments across various investment products. If equities are your sole investments, it makes sense to diversify between different companies and sectors. In this way, loss made on some investments can be absorbed by gains made in others, keeping the overall return on investments positive.
  You can also diversify your investment by investing in open-end funds managed under various unit trust schemes. While investing in mutual funds check the rating of the instruments. Similarly while investing in any security please check the rating if any available.
  
• Beware of Scams:
  You should always ensure that the stockbroker you choose is licensed by the Securities and Exchange Commission of Pakistan (SEC) to trade. Prefer stock brokerage firms with good track record. As a shrewd investor, you should know your rights and responsibilities and should beware of the rules that govern your investments as well as the legal recourse available, in case things go wrong. You can report abuse to the SEC, whose mission is to ensure the development of a fair, efficient, and transparent securities and futures market. Although its main function is regulatory in nature, the SEC has the ultimate responsibility to protect the investor through market supervision and ensuring that its laws and regulations are complied with.
  Stock exchanges are the frontline regulators; they must play a proactive role. Send all your complaints in writing to the respective stock exchange(s) with full details, including the complainant's name, address and telephone number etc. In case you do not get a response to your complaint, please contact the "Complaint Cell" in the SEC.
  

Important Things To Know About Equities

• If you can afford to take some risk and have the ability to endure the market's ups and downs, equity investments may grant you good returns.
  
• Do not invest any money with the stockbroker as a deposit at fixed rate of return. Such a deposit has no legal standing and the investor is exposed to risk of losing his money.
  
• You must know the rates of fees and commissions charged by the broker/stock exchange as these affect your costs, and hence your returns.
  
• The aim of investing in stocks and shares is to buy at low and sell at high. Knowing when is however, the problem. Many investors attempt to time the market: they try to figure out when the market is going up and buy before it does and then anticipate when it is going to crash and sell before that. Usually you try to buy when the upswing has begun and sell as the downswing starts. However, such accuracy is extremely difficult to achieve.
  
• The stock market is driven by two emotions: greed and fear. People are caught up in the boom fever and pay beyond the worth of shares this is the greed that drives bull markets. In bear markets, people get carried away with the ruling pessimism and are eager to sell their investments believing in the worst rumors this is the fear that dominates bear markets.
  
• Be careful in selecting your broker. Ensure that he/she is licensed by the SEC to trade and the stock broking firm has a good track record. Give clear instructions to avoid ambiguity, check trade confirmations received and keep a proper record of all your transactions. All the registered brokers are listed at the web site of SEC
  

 

How To Trade?

Your first step is to contact a stockbroker or an investment adviser.

• Introducing Stockbrokers:
  Stockbrokers are your link to the stock market. Their job is to help you get the best price available when you want to buy or sell your shares. Be careful in selecting your broker.
  
• The Mechanics of Share Dealing:
  There are various ways of investing in the stock market: you can deal directly in shares; invest through a unit trust or investment trust or let your investment be handled by an advisor.
  
• Opening of Account:
  Once you have decided the broker with whom you intend to deal, you should ensure that an account is opened in your name by filling the account opening form. It is imperative that the terms and conditions prescribed in the account opening form are read very carefully and well understood. It will be in your interest if you give clear instructions as to who can operate the account. It is preferred if the investor gives instructions that business can only be transacted in the account on his instructions.
  
• Buying/ Selling Directly:
  When you have decided to buy/sell shares in a particular company, contact your stockbroker. You can ask to buy/sell a fixed number of shares or shares up to a certain value. Get the contract note confirming your order immediately and check for the following information.
  
  • Name and number of securities;
    
  • Date on which the order is executed;
    
  • Nature of transaction (spot, ready or forward and also whether bought or sold);
    
  • Price at which the transaction is executed; and
    
  • Commission charged by the broker;
    

  
  There are two types of orders:
  

  • Limit Orders: In a limit order, the client specifies the price at which the order is to be executed.
    
  • Market Order: Also known as at best order, the order is executed at the prevailing market rate.
    

Various Ways Of Becoming A Shareholder:

Before you invest in shares, you must consider a number of factors

• How Much Money Can You Afford to Invest?
  Investment in shares does not result in instant yields. Do not invest any money which you may need immediately, since the price of shares can go up and down, It is advisable to keep some money in a deposit account to meet your financial obligations in the near future. In this way, you will not be forced to sell shares even at low price, if cash is needed urgently.
  
• How Do You Want to Invest?
  There are various ways of participating in the stock market:
  
  • You can invest directly by purchasing shares through a broker. You may buy shares in one company or you may spread your risk by investing in a number of different companies to give you a 'portfolio' or collection of shares.
    
  • You can invest indirectly and through collective investment schemes such as open-ended unit trusts and closed-ended mutual funds. This would reduce your risk further.
    
• Do You Need Advice or Do You Want to Make Your Own Decisions?
  
  Investors can choose to make their own share dealing decisions or take advice from a professional. Buying and selling shares and tracking their performance can be time consuming but it is rewarding for those who have the time to manage their own investments. Some investors deal with stockbrokers directly while others prefer to use the services of professional managers who have discretionary powers to manage the investment portfolio
  

 

 

What Happens Once You Are A Shareholder:

There are several types of shareholders: some are long term investors who simply tuck away their investments for years while others trade frequently and keep a close eye on how their shares are performing. You can check your shares' performance in various ways. A daily indicator of share price movements is available in many newspapers and also on website of the relevant stock exchange. You may access this information directly or through your stock broker/advisor.

Informative articles about many companies are regularly published in newspapers and investment magazines. Your stockbroker may also provide valuable information. Some publish newsletters for their clients, reflecting their views on the performance of selected companies. Annual reports of companies also contain useful information. Some companies have shareholder relations departments, which can help with factual information

Investor Protection:

You should always ensure that the stockbroker you choose is licensed by the Securities and Exchange Commission of Pakistan (SEC) to trade. Prefer stock brokerage firms with good track record. As a shrewd investor, you should know your rights and responsibilities and should beware of the rules that govern your investments as well as the legal recourse available, in case things go wrong. You can report abuse to the SEC, whose mission is to ensure the development of a fair, efficient, and transparent securities and futures market. Although its main function is regulatory in nature, the SEC has the ultimate responsibility to protect the investor through market supervision and ensuring that its laws and regulations are complied with.

Stock exchanges are the frontline regulators; they must play a proactive role. Send all your complaints in writing to the respective stock exchange(s) with full details, including the complainant's name, address and telephone number etc. In case you do not get a response to your complaint, please contact the "Complaint Cell" in the SEC

Introduction of Index Trading and derivatives products such as Options and Swaps and other products will increase the products offered by the exchange, giving investors more choices and hence increasing trading activity
of the exchange. Integration of the exchanges is also being considered and is likely after demutualization.
Another concept that will help greatly in expanding investor base is cross listings and GDRs. Work is underway in this regard.

 

 

LSE IT Services

• Trading System: Ultra Trade
  
• View Only Terminals: VOT
  
• Pre-Trade Risk Management Systems: Trade Risk Filter
  
• Clearing & Settlement System: CHS
  
• Dissemination/Reporting System: Lahore Stock Services
  
• Corporate Information System: Corporate Information System
  
• Accounting Systems: AccSys
  
• Smart Stock System: Broker's Back Office System
  
• Client Trade Risk Filter: Client Level Pre-Trade Margin Control
  
• High Speed Data Display and Feed: Ticker & VendorFeed
  
• Online Trading Solution: BrokerNet
  
• Real-time Surveillance System
  
• Gateway Interface for Straight Through Processing
  
• Website: www.LahoreStock.com
  
• Portfolio Reports for Investors over the website
  
• Stock Buddy: Stock Quotes over the MSN
  
• Remote Electronic Trading Floors: STF, FTF
  

 

Stock Market Performance:

During FY07, the LSE-25 index increased from 4379 to close at 4850 on June 30, 2007 i.e. an increase of 471 points or 10% year-on-year. The period's high was on October 10, 2006 when the LSE-25 touched 5031. Improved economic indicators and enhanced corporate earnings are some of the factors having a positively impact on our markets during the year under review. On the other
hand unstable political conditions and increasing inflation and interest rates have been the negative factors. The first half of FY07 witnessed a decline of 8% while the second half saw an increase of 16% in LSE-25 index.

Turnover of ready market shares was an average of 33.78 million
shares per day as against 61.26 million shares traded daily on average during 2005-06. The
traded value decreased to an average of Rs.3.44 billion
per day as against Rs.6.05 billion worth of shares that were traded daily
on average during 2005-06. The decrease in volume is mainly due to doubling of CVT
on purchase of shares and other transaction taxes on trades with effect from July 01, 2006.

The market capitalization of LSE stood at Rs.2.693 trillion
equivalent to US$45 billion approximately, on
July 01, 2006
and Rs.3.860 trillion equivalent to US$64
billion approximately, on June 30, 2007, representing an increase of 43% for the period.

 

 

 

Listing Activity:

During the period under review, 25 new securities were listed at LSE, of which 10 were new companies with listed capital Rs.47.412 billion, 11 were open ended funds and 4 were Term Finance Certificates with total issue size of Rs.2.050 billion. Listed capital increased by 26% from Rs.470 billion to Rs.595 billion.

Further, LSE through a capital markets expert conducted a research study for the development of the Corporate Bonds/TFCs
segment of LSE's business. The Exchange is in the process of implementing some of the recommendations of this study as a result of which issuers are being urged to appoint a Market Maker for all issues of TFCs
in an effort to promote the secondary market of these products.

Future Outlook:

With the advent of technology, now around 49% of the trading volume is being generated through remote trading terminals. It is also because of technology that the LSE was able to establish its trading floors in other cities as well. Lahore Stock Exchange
has Trading Floors in cities of Faisalabad and Sialkot and is now considering opening trading floors in Multan
and Peshawar as well.

Introduction of Index Trading and derivatives products such as Options and Swaps and other products will increase the products offered by the exchange, giving investors more choices and hence increasing trading activity
of the exchange.
Integration of the exchanges is also being considered and is likely after demutualization.
Another concept that will help greatly in expanding investor base is cross listings and GDRs. Work is underway in this regard.