FI Karachi Stock Exchange (Edited)

8/8/2019 FI Karachi Stock Exchange (Edited)

1/26


2/26

The Karachi Stock

Exchange

Empowering The

Companies of TomorrowBy Asad.Mazhar


3/26

What is Stock Exchange?

A stock exchange, share market orbourse is a corporation or mutual

organization which provides facilities forstock brokers and traders, to tradecompany stocks and other security.

By Asad.Mazhar


4/26

KSE Yesterday and Today

An Overview


5/26

KSE Yesterday

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


6/26

KSE Today

Exchange owned by 200members

652 companies listed

4 indices

Modern Risk ManagementSystem

Var Based MarginPre Trade Margin Verification

KSE is FIX Compliant

Electronic Trading through KATS

Market capitalization*:US $ 54.28 billion


7/26


8/26

Role and Functions of

a Stock Exchange


9/26

Established for the purpose of assisting, regulating andcontrolling business of buying, selling and dealing insecurities.

Provides a market for the trading of securities to individualsand organizations seeking to invest their saving or excessfunds through the purchase of securities.


10/26

Provides a physical location for buying and selling securitiesthat have been listed for trading on that exchange.

Establishes rules for fair trading practices and regulates thetrading activities of its members according to those rules.

The exchange itself does not buy or sell the securities, nordoes it set prices for them.


11/26

Fair

The exchange assures that no investor will have an undueadvantage over other market participants.

Efficient marketThis means that orders are executed and transactions are settledin 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 amutually agreeable price is found the trade is made


12/26

Transparency

Investor make informed and intelligent decision about theparticular 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, corporateconditions and developments dividend, mergers and jointventures, and management changes etc.


13/26

KSE has 4 Indices

KSE 100 Most widely reported Index

Representation of all Sectors of the Exchange

Consists of 100 companies representing 85% of totalmarket 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


14/26

KMI - 30

Introduced in September 2008

KMI comprises of 30 Companies that quality the KMI Shariahscreening criteria and are weighted by float adjusted marketcapitalization.

12% cap on weights of individual securities.

Rebalancing of the Index will be done bi-annually.

Shariah Supervisory Board of Meezan Bank chaired by eminentShariah scholar Justice (Retd.) Mufti Muhammad Taqi Usmani.

A total return Index based on free float methodology

All Shares

Is a capital weighted index and consists of all companies


15/26

Listing Procedures

Equity Listing on Normal Counter

Listing on Over-the-Counter (OTC)

Listing of Long Term Debt Instruments, both Listed & Non-

Listed Companies Listing of Short Term Debt Instruments, both Listed & Non-

Listed Companies

Listing of Closed-End Mutual Funds

Listing of Open-End Mutual Fund

Listing of Different

Kinds & Classes of Shares


16/26

Major Requirements of Listing include:

Minimum paid up capital of Rs. 200 million for a company seekinglisting

To succeed public offer of equity, it has to be subscribe by atleast 500 applications

Provisions of Listing Regulation 6-A relating to minimum freshpublic offering through prospectus as well as the minimumpublic offering requirements by way of Offer For Sale as laid

down under the Companies (Issue of Capital) Rule, 1996.


17/26

The offering document has to be cleared by KSE before it issubmitted to the Securities & Exchange Commission ofPakistan for approval.

The company seeking listing is required to fulfill therelevant requirement of the Exchange under the ListingRegulations and the disclosures as required under theSecond Schedule of the Companies Ordinance 1984 &

Companies (Issue of Capital) Rules, 1996.


18/26

Simple Admission and Listing Fee

Application made along with prescribed Documents and Fees toKSE;

For Fees

Initial Listing Fee:

1/10 of 1% of the paid-up capital (subject to a maximum of Rs.1.5 million.

Annual Listing Fee (companies having paid-up capital of):

Upto Rs.50 mill. and above.Rs.15,000

Upto Rs.200 mill............Rs.30,000

Above Rs.200mill........Rs.60,000

In addition, Service Charges of Rs. 25,000 are also applicable


19/26

Products and Services


20/26

Ready Market:

A 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 Futures:

A standardized contract, to buy or sell a certain underlying

instrument at a certain date in the future, at specified price. Allsettlement occurs purely on cash basis. Depending on thecontract, settlement occurs 30, 60 & 90 days after the contractis purchased.


21/26

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 thecontract is purchased.

Deliverable Futures:

Forward contracts to buy or sell a certain underlyinginstrument with actual delivery of the underlying instrument

occurring. Settlement occurs 30 days after the contract ispurchased.

- CFS (discontinued)- COT (discontinued)


22/26

Company Services

Customized services and state-of-the-art technologyinfrastructure, have given us an edge over other exchangesin 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 informationthrough Display Only Terminal

Internet trading facilities available.

Order-driven system .

Brokers connectivity to KSE through VPN (to ensure securityof data).


23/26

Data Services:

TV channels also display KSE ticker through live feeds fromKSE system.

Investors provided customized data packages for trading andassessment 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.


24/26

Open-end-Mutual Funds

Close-end Mutual Fund

Modaraba

Leasing Companies

Inv. Banks / Inv. Cos. / Sec.

CosCommercial Banks

Insurance

Textile Spinning

Textile Weaving

Textile CompositeWoolen

Synthetics & Rayon

Jute

Sugar & Allied Industries

Cement

Tobacco

Refinery

Power Generation & Distribution

Oil & Gas Marketing Companies

Oil & Gas ExplorationCompanies

Engineering

Automobile Assembler

Automobile Parts & Accessories

Cables & Electric Goods

Transport

Technology & Communication

Fe

rtilizer

Pharmaceutical

Chemical

Paper & Board

Vanaspati & AlliedIndustries

Leather & Tanneries

Foods & Personal CareProducts

Glass & Ceramics

Miscellaneous

Bonds

Future Contracts

Stock Index FutureContract


25/26

Delisting

Stock exchange can delist companies for a number ofreasons including :-

Merger with another company

Solvency problems

Name change company asked to be removed

Failure to comply with exchange rules


26/26

The following arein process:

Demutualization ofthe Exchange public allylisted with

strategic investor

Promotion ofDerivativeProducts

New Services (Data Vending)

Debt Market Trading Platform

Investors education programs

(road shows, seminars &

online training)

Future Plans of KSE

FI Karachi Stock Exchange (Edited)

Documents

Transcript of FI Karachi Stock Exchange (Edited)