PRESENTATION ON KARACHI STOCK EXCHANGE

PRESENTATION ON KARACHI STOCK EXCHANGE AHSEN RAZA KHAN AYLA WAJAHATMADIHA HAROON SAAD JALIL SHEIKH TAIMOOR HAROON TOSIQ HAMMIAT

PRESENTERS:A stock exchange, share market or bourse is a corporation or mutual organization which provides facilities for stock brokers and traders, to trade in company stocks and other security.

What is Stock Exchange?KSE Yesterday, Today and TomorrowAn Overview

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Incorporated on March 10, 1949

Premier Stock exchange of the country

Started with 5 companies that had a paid up capital of Rs. 37 million

Trading was done through an open-out-cry system

The first index was the KSE 50 Index

Exchange owned by 200 members

652 companies listed

4 indices

Modern Risk Management System

KSE uses FIX Protocol

Electronic Trading through KATS

Publicly Listed Company with strategic investor

Products to include: Options ETFs Tradeable Sector Indices Debt Market Trading

Broad based investor participation

Cross border listings of companies

Opening up of branches in other cities and in the region

Raising capital for businessesMobilizing savings for investmentFacilitating company growthRedistribution of wealthCorporate governanceCreating investment opportunities for small investorsGovernment capital-raising for development projectsBarometer of the economy

ROLES AND FUNCTION OF KARACHI STOCK EXCHANGEFairThe exchange assures that no investor will have an undue advantage over other market participants.

Efficient marketThis means that orders are executed and transactions are settled in the fastest possible way.

Doing businessPeople who buy or sell stock on an exchange do so through a broker.The broker takes your order to the floor of the exchange looks for a broker representing someone wanting to buy/sell. If a mutually agreeable price is found the trade is made

TransparencyInvestor make informed and intelligent decision about the particular stock based on information.Listed companies must disclose information in timely, complete and accurate manner to the Exchange and the public on a regular basis.Required information include stock price, corporate conditions and developments dividend, mergers and joint ventures, and management changes etc.

PRODUCTS AND SERVICES Ready MarketA conventional stock market also known as the regular market, where buyers and sellers come together to trade shares. Settlement of trade occurs 2 days after the trade.

Cash Settled FuturesA standardized contract, to buy or sell a certain underlying instrument at a certain date in the future, at specified price. All settlement occurs purely on cash basis. Depending on the contract, settlement occurs 30, 60 & 90 days after the contract is purchased.

Deliverable FuturesForward contracts to buy or sell a certain underlying instrument with actual delivery of the underlying instrument occurring. Settlement occurs 30 days after the contract is purchased.

Stock Index Futures

Stock Index Futures are traded in a number of contracts. Each contract is to buy or sell a fixed value of the index. Stock Index Futures Contract occurs 90 days after the contract is purchased.

Company Services

Customized services and state-of-the-art technology infrastructure, have given us an edge over other exchanges in the region. Fully automated trading, clearing and settlement system. Internet routed trading facility. Gateway trading (Order Management System). Investors and fund managers can also access information through Display Only Terminal Internet trading facilities available. Order-driven system . Brokers connectivity to KSE through VPN (to ensure security of data).

Data Services:

TV channels also display KSE ticker through live feeds from KSE system.Investors provided customized data packages for trading and assessment of their portfolio on a real time basis.Data feed provided to major international redistributors (Reuters, Bloomberg) on real time basis.KSE website offers data of market on real time basis, including listed company profiles, snap shot of financials, press releases and summary of market activities on real time basis.HOW TO BECOME THE MEMBER OF KSE?

HOW DOES AN INVERSTOR TRADE AT KSE?

In order to purchase or sell securities on a stock exchange, the following steps have to be taken:Selection of Broker.Placing the order.Preparing the contract note. Settlement.

TRADING AT KSE A CONTRACT NOTE GENERALLY CONTAINS FOLLOWING INFORMATION

Name and the address of the stockbroker.The name and address of the jobber.The type and price of the share.The commission of the broker.The date of transactionThe settlement in the Karachi Stock Exchange takes place through the centralized clearing house.

The trades in the Karachi Stock Exchange are settled through the weekly clearing system

Settlement of Transactions:THE CENTRAL DEPOSITORY COMPANY (CDC)established in 1993 and started its operations in 1997 introduced electronic custody of shares and paperless settlement of securities the only securities depository of the Pakistan, sponsored by the stock exchanges, national and international institutions regulated by the Securities Exchange Commission of Pakistankey function of CDC is to operate and maintain the Central Depository System (CDS) in the guidance of a well-defined legal frameworkLEGAL AUTHORITYTHE NATIONAL CLEARING COMPANY OF PAKISTAN LIMITED (NCCPL) On July 3, 2001 to manage and operate the National Clearing & Settlement System (NCSS), an automated electronic settlement system, NCCPL was incorporateda separate legal entity and a significant institution of Pakistan's Capital Market providing clearing and settlement services to all three stock exchange in the country provides stability to the market by capping the systematic risk to a good extentimproved efficiency of the settlement process by introducing a consolidated and geographical neutral clearing and settlement systemNCSSs technologically advanced features such as automated Pay and Collect functionality, introduced extraordinary transparency and efficiency in the clearing process

The Securities and Exchange Commission of Pakistan (SECP) is a regulatory authority for the securities markets and corporate sector in Pakistan.

MONITORING AUTHORITYRegulation of securities and CDC (Central Depository Company).Credit rating companies.Incorporation/registration of companies.Administration of company law.Regulation of non banking finance.Encourage foreign investment

Functions Of SECPKSE 100 Most widely reported Index Representation of all Sectors of the Exchange Consists of 100 companies representing 85% of total market capitalization of the exchange

KSE 30 Introduced in 2006 Based on the Free Float Methodology Includes only the top 30 most liquid companies listed on the KSE Largest 30 free float market capitalization companies

KSE has 4 Indices

KMI - 30

Introduced in September 2008

KMI comprises of 30 Companies that quality the KMI Shariah screening criteria and are weighted by float adjusted market capitalization.

12% cap on weights of individual securities.

Rebalancing of the Index will be done bi-annually.

A total return Index based on free float methodology

All Shares

Is a capital weighted index and consists of all companies