Fatima Jinnah Women university

Final project

Karachi stock exchange

Submitted to:

Maam Nadia Jamil

Submitted by:

Saira Gulzar

Ayesha Tahir Khan

Bushra Tabassum

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 ACKNOWLEDGEMENT
All praises and thanks to Almighty Allah. The lord and creator of this universe by
whose power and glory all good things are accomplished. He is also the most merciful,
who bestowed on us the potential, ability and an opportunity to work on this report.

We owe our profoundest thanks to our teacher Maam Nadia Jamil we feel solely
blessed to have her as our teacher, whose strength and wisdom we learn up to and no
doubt, experience of work with her is far better than we believed possible. We appreciate
his way of teaching, explaining and guiding the students. She really has an art to get
maximum for students without making them feel what he got from them. She is really a
source of inspiration for us and for every student of our class.

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Table of contents

 Karachi stock exchange………………………………………….

 Vision
 Mission
 Market index
 KSE 1oo index
 Clearing and settlement system
 Security deposit and clearing companies
 Brokers of KSE
 Types of markets
 Bond market
 Physical market
 Forex market

 References

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Definition of Stock Exchange

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“An association of stockbrokers who meet to buy and sell stocks and bonds according to
fixed regulations.”

Karachi Stock Exchange

• Karachi stock exchange was established on 18 September 1947.

• The Karachi stock exchange is the biggest and most liquid exchange of Pakistan
and has been declared as the best performing stock market of the world for the
year 2002.
• The Karachi Stock Exchange or KSE is a stock exchange located in Karachi,
Sindh, Pakistan. it is Pakistan's largest and oldest stock exchange, with many
Pakistani as well as overseas listings. Its current premises are situated on Stock
Exchange Road, in the heart of Karachi's Business District.

Vision of Karachi Stock Exchange

“To be a leadung financial institution, offering efficient, fair and transparent securities in
the market and enjoying full confidence of the investors.”

Mission of KSE

• To strive and provide quality and value added services to capital market in an
efficient, transparent and orderly manner: compatible with international standards
and best practices.
• To provide state of the art technology and automated trading operations driven by
a team of professionals in accordance with good corporate governance.
• To protect and safeguard the interest of all its stockholders, i.e. member listed
companies, employees and ivestors at large, and
• To reflect country’s ecinomic health and behavior and play its role for the growth,
development and prosperity of Pakistan.

Market Indices

“A stock market index is a method of measuring a section of the stock market.”

• KSE began with a 50 shares index.

• As the market grew a representative index was needed.
• On November 1, 1991 the KSE-100 was introduced and remains to this date the
most generally accepted measure of the Exchange. The KSE-100 is a capital
weighted index and consists of 100 companies representing about 90 percent of
market capitalization of the Exchange.

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KSE 100 Index

“Karachi Stock Exchange 100 Index (KSE-100 Index) is a stock index acting as a
benchmark to compare prices on the Karachi Stock Exchange (KSE) over a period of
time.”

In determining representative compaines to compute the index on, companies with the
highest market capitalization are selected. However, to ensure full market representation,
the company with the highest market capitalization from each sector is also included.

Top 30 KSE 100 Index Companies

The following is a list of 30 companies with the highest market capitalization volume and
their respective weightages in the index and account for over 80% of the KSE index as of
February 20, 2008:

Number Company Name Weightage (%) Market Capitalization (PKR)

1 OGDCL 14.14 550,948,930,000

2 MCB 7.17 279,583,150,000
3 National Bank of Pakistan 5.43 211,726,900,000
4 Pakistan Petroleum 5.06 197,201,080,000
5 Standard Chartered Bank 4.41 171,704,800,000
6 PTCL 4.28 166,810,800,000
7 United Bank Limited 4.13 161,025,160,000
8 Jahangir Siddiqui & Company 2.66 103,600,000,000
9 Pakistan State Oil 2.08 81,034,440,000
10 Allied Bank Limited 2.01 78,371,670,000
11 Nestlé Pakistan 1.93 75,280,250,000
12 Pakistan Oilfields 1.71 66,824,220,000
13 Fauji Fertilizer Company 1.68 65,607,390,000
14 ABN AMRO 1.63 63,666,370,000.
15 Engro Chemical 1.45 56,492,990,000
16 Arif Habib Securities 1.40 54,660,000,000
17 NIB Bank 1.27 49,320,250,000

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18 Kot Addu Power Company 1.19 46,565,400,000
19 EFU General Insurance 1.16 45,300,000,000
20 Bank of Punjab 1.13 43,869,030,000
21 Fauji Fertilizer Bin Qasim 1.06 41,474,480,000
22 Bank Alfalah 1.03 39,975,000,000
23 Adamjee Insurance 1.01 39,258,300,000
24 Pakistan Tobacco Company 0.99 38,707,280,000
25 Sui Northern Gas Pipelines 0.98 38,300,100,000
26 Hub Power Company 0.98 38,128,240,000
27 Dawood Hercules Chemicals 0.91 35,549,620,000
28 Habib Metropolitan Bank 0.91 35,354,280,000
29 EFU Life Assurance 0.89 34,750,000,000
30 Lucky Cement 0.86 33,593,480,000

Clearing and Settlement Procedure

Trading System

The KSE has introduced as state of the art computerized trading system known as
Karachi automated trading system to provide a fair , transparent an deficient and cost
effective market for the investors.

The trading is divided into four distinct segments, each of which has its own clearing and
settlement procedure. These are

 T+3
 Provisionally listed companies
 Spot (T+1)
 Transactions and future contrasts

T + 3 Counters

Transactions in this segment are settled through the clearing and settlement? NNCPL that
nets out the purchases and sales and the financial obligations theory of each member/firm
for the notified clearing period. Payment from and to members are routed through the

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clearing & settlement/ NNCPL. For the securities declared eligible securities by the
central depositary company the clearing and settlement takes place through NNCPL in
order to handle the clearing of all the three stock exchanges of the county under one roof,
the national clearing and settlement system has been introduced. NNCPL is managed by
central depositary company of Pakistan limited.

Futures Trading in Provisionally Listed Companies

The shares of companies which make a minimum public offering of Rs.150 million are
traded on this segment from the date of publication of offering documents. The period of
contracts of each script is notified by the exchange. The outstanding contracts carried out
under the provisionally listed companies are settled on the settlement date and members
are not allowed to transfer their positions to the ready clearing board or any other board.
On formal listing, the trading in the shares of the company is shifted to the ready board
counter under T+ 3 settlement system from the dates of normal listing.

Spot / T+1 Transaction

For about 5 days before the closure of shares transfer book notified by the company for
any corporate action, transactions are settled on T+ 1 basis. For non-CDC securities the
delivery and payment is settled through the clearing house of the exchange, however,
delivery is tendered directly between the buying and selling members as per the
instructions of the clearing house, however the delivery is tendered directly between the
buying and selling members as per the instructions of the clearing 7 settlement. The
transactions in CDC eligible securities are settled through NCCPL.

Future Contracts

A future contract involves purchase and sale of securities at some future date (normally
within one calendar month) at a price foxed today. The number and names of companies
to be traded on the futures counter are determined every six months based on the
eligibility criteria approved by SECP in this regard ad which are notified to the market
participants in advance. Under the regulations governing future contracts and the contract
is fixed for a period of one month transaction costs. Brokerage on transactions is freely
negotiable between the negotiator and the client.

Stamp duty is charged at 1.5% of the face value of the shares under the physical form of
transfer. There is no stamp duty for transfer settled through the central depositary system;
however, there is a one time stamp duty at the rate of one paisa per share at the time of
deposit of securities in the CDS. The stamp duty is born by the buyer ad the seller.

Security Deposit and Clearing Companies

Central Depositary Company of Pakistan

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The transformation of physical settlement to online real-time book-entry of the securities
through Central Depositary System has been achieved. This has eliminated the chances of
forgery, fraud and delay in transfer. Around 97% of the settlement is routed through CDS.
The elimination of hassles of physical settlement has been the most important reason for
the phenomenal rise in trading values and volumes.

National Clearing and Settlement System (NCSS)

NCSS is an electronic system developed to replace the individual clearing houses of

Pakistan’s three stock exchanges by a single entity. This system is operated by national
clearing company of Pakistan limited (NNCPL), which has been registered as a seoerate
legal entity. The operations of NCSS are rapidly gaining momentum and so far a majority
of the securities have been introduced into the system for settlement purpose. NCSS
provide 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, NCS with its technologically
advanced features such as automated Pay and collect functionality, introduced
extraordinary transparency and efficiency in the clearing process. Both CDS and NCSS
are managed by separate companies and associated concerns of KSE.

BROKERS IN KSE

A stockbroker is a regulated professional who buys and sells shares and other securities
through market makers or Agency Only Firms on behalf of investors.

A. REHMAN H. ABDULLA DURVESH ABA ALI HABIB SECURITIES

713, Stock Exchange Building, Stock Exchange Road
Ph.# 2416059-2419848
ABDUL MAJEED ZAKARIA
Room No.17, Ground Floor, New Bldg. Karachi Stock
Exchange
Ph.# 2428186-2428184-2428185
ABDUL RASHID JAN MOHD. DAWOOD
401-Uni Towers, I.I.Chundrigar Road
Ph.# 2413445-2412265
AKD SECURITIES & SAFE DEPOSIT CO. LTD.
611, Clifton Centre, Kehkashan, Block-8, Clifton
Ph.# 5863810-5863801
Fax# 5872206
ALFA ADHI CAPITAL MANAGEMENT (PVT) LTD.
83, Old Stock Exchange Bldg., Stock Exchange Road
Ph.# 2429334-2419668-2422550
Fax# 2425669
ALIHUSSAIN RAJAB ALI
4-5, Stock Exchange Building, Stock Exchange Road
Ph.# 2415076-2416015
ARIF HABIB SECURITIES LTD.
60-63,S tock Exchange Building, Stock Exchange Road
Ph.# 2415215-2415213-2415214-2427050
ASK SECURITIES (PVT) LTD.
301-A, 3rd Floor, Lakson Square, 265 R.A.Lines, Sarwar 15th Floor PNSC Building
Shaheed Rd.
Ph.# 5684179-5689897
Fax# 5684018
419-A, Stock Exchange Building, I.I.Chundrigar Road
Ph.# 2417674-2412491-2415631-2429666
ABDUL RASHID JAN MOHAMMAD
401-Unitower, I.I.Chundrigar Road
Ph.# 2412266-2412265-2410427
Fax# 2416791
ABDUL REHMAN H. ABDULLA DURVESH
713-Stock Exchange Building, Stock Exchange Road
Ph.# 2419848-2416059-2417707
AL-MAL SECURITIES & SERVICES LTD.
10th Floor, Progressive Square, Block-6, Shahrah-e-
Faisal, PECHS
Ph.# 4547525-4547521-4547522-4547523
ALI HASNAIN YUSUF ALI
Rm 84, 2nd Fl. Stock Exch.Bldg., Stock Exchange Road
Ph.# 2428490-2428488-2441101-2441100
AMIN SIDDIQUE PAREKH
81, Karachi Stock Exchange Bldg, Karachi Stock
Exchange Road
Ph.# 2410391-2422914
ASIAN STOCKS FUND LIMITED
302, Clifton Centre, Main Clifton Road
Ph.# 5863565-5863561-5863563-5863562
BARINGS SECURITIES PAKISTAN (PVT) LTD.
M.T.Khan Road
Ph.# 5610568-5610565-5610579-5610570

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C & K MANAGEMENT ASSOCIATES (PVT) LTD. CARR MASHRIQ (PVT) LTD.
B-904, Lakson Square Building-3, 254, Sarwar Shaheed
404,Trade Tower, Abdullah Harron Road
Road, Saddar
Ph.# 5685930-5687839 Ph.# 5676119-5676116
Fax# 5682578
CENTRAL DEPOSITORY COMPANY CORPORATE VENTURE PARTNERS
8th Flr, Karachi Stock Exchange, Off Chundrigar Road 603, 6th Floor, Clifton Centre, Bloc-5, Khayaban-e-
Ph.# 2416774 Roomi, Clifton
Fax# 2426271 Ph.# 5872486-5872576-5872510-5871805
DAWOOD JAN MUHAMMAD EASTERN CAPITAL LTD.
Room #714, Stock Exchange Bldg., I.I. Chundrigar Road 609-612, Clifton Centre, Clifton
Ph.# 2411571-2411656-2414214 Ph.# 5863801-5863802-5863803-5863808
Fax# 2418685
FAWAD YUSUF SECURITIES (PVT) LTD. FIRST CAPITAL ABN AMRO EQUITIES (PAKISTAN)
79, Old Stock Exchange Building, Stock Exchange Road Room 610, Stock Exchange Bldg.
Ph.# 2444554-2438915-2428603 Ph.# 2444461-2444458-2444459-2444460
Fax# 2428464
FORTUNE SECURITIES LTD. H. HATIM H. KARIM
712-Stock Exchange Building, Stock Exchange Road 111-D, 22/6, Nazimabad
Ph.# 2444232-2444228-2444229-2444230 Ph.# 2415869-2415861-2413732-2415862
H.P. BYRAMJI & SONS HAJI GHANI HAJI USMAN
162-M.A.Jinnah Road, Near Denso Hall, Saddar 18-Stock Exchange Building, Stock Exchange Road
Ph.# 2436119-2434436-2433108 Ph.# 2412164-2412161
HAJI HAROON KAPADIA
631-633,Stock Exchange Bldg., Off:I.I.Chundrigar Road
Ph.# 2410448-2410448-2430461-2432365

Here is a list of leading 13 of the 88 brokers who have been named, in the forensic report
as having profited from the ‘situation’:

• Atlas Investments
• AKD Securities
• BMA Securities
• Arif Habib
• Orix Investment Bank
• KASB
• Taurus Securities
• Abdul Jabbar Khanani
• Escort Investments
• Jehangir Siddiqui
• Akbar Ali Cassim and Sons
• Motiwala Securities
• Elixir Investments

Types of markets:

There are a wide variety of markets in which one can invest money.

• Bonds,

• Forex,

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 • Derivatives

• Physical Assets.

• Stock Market

Stock Market
Most familiar to the average investor is the stock market. This market allows investors to
buy and sell shares of ownership in publicly traded companies.

Money is made in this market in two main ways.

• The first is through capital gain, in which the value of each share increases in
value.

• The other is through dividends, in which companies pass on income to investors.

Bond Market
• The bond market (also known as the debt, credit, or fixed income market) is a
financial market where participants buy and sell debt securities, usually in the
form of bonds.The debt issuers then make regular payments to debt holders in the
form of coupon payments and, once the debt matures, pay back the principal on
the debt. The most common type of financial instruments issued in this market are
bonds, bills, notes and certificates of deposit. There are also more exotic types of
debt including mortgage-backed securities and collateralized debt obligations.

Forex Market
• The forex market allows investors to speculate on changes in the exchange rates
between currencies. Investors will purchase one currency by selling another in the
hope that the currency they purchased goes up in value compared to the one they
sold. In this market, because the moves between currencies are generally
small and investments are shorter term, a lot of leverage is used. Some forex
brokers allow leverage as high as 500:1, which means that you can control $500
for every $1 you invest.

Physical Assets Market

• The investment in physical assets is essentially the purchase of assets such as
metals, jewelry, real estate, cattle and much more. In this market, investors hope
that the price for which they can sell an asset is more than what they paid for it.
The risks and costs associated with this type of investment will differ with each
type of physical asset. For example, there can be holding fees on gold; if you own

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 cattle, the cost of caring for them is considerable.

• The last major type of investment is an expansion of all of the above types of
markets. Derivatives are securities that derive their value from an underlying asset
such as a stock, interest rate, currency or physical asset. Investors in these types of
securities can go long or short on the underlying asset and can purchase either the
right or obligation to purchase or sell it. As the value of the underlying asset
changes, the value of the derivative changes as well. The major types of
derivatives are options, futures and forwards.

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