workingofstockexchange.ppt

Presenters:

Salman Yousaf

Hassan Baber

Maheen Idris

Talha Khalil Sherani

Stock Exchange

Stocks are basically 'shares' of a company.

The stock exchange is an institute in which we sell and buy

Stocks with the help of brokers on the behalf of Investors.

Stock Exchange In Pakistan

There are three stock exchanges in Pakistan:

1. Karachi Stock Exchange (KSE) -August 14, 1947

2. Lahore Stock Exchange (LSE) -October 1970

3. Islamabad Stock Exchange (ISE) -25 October 1989

Karachi Stock Exchange

It is Pakistan's largest and one of the oldest stock

exchanges.

There are 652 companies is enlisted in the KSE.

The KSE has two market indixes (KSE-30, KSE-100).

A new Index introduced is (KMI-30).

The market capitalization stood at US$ 53.3 billion -

(28 May, 2013)

Lahore Stock Exchange

It is Pakistan's  second largest stock exchange in the

country.

There are 447 companies enlisted in LSE.

The LSE has just one market indices LSE 25 Index.

The market capitalization stood at $ 36.44 billion on Jan 30,

2012.

Islamabad Stock Exchange

ISE is the youngest of the three stock exchanges of Pakistan

There are 261 companies enlisted in ISE.

At present, the ISE has one market indices (ISE 10 Index).

The market capitalization stood at Rs. 2,275.00 billion as on

04-04-2007 .

How To Invest ?

If an investor want to purchase a share of particular company he has a open a account with broker.

It is required by the broker to registered with them

you have to submit minimum deposit of Rs:50,000 with the broker. which will be your capital and you buy shares from that money which you have deposit with your broker

Registration Process Of New Investor

How To Trade

Trading Procedure In Stock Exchange

In order to purchase or sell Shares on the stock exchange. The following steps has been taken:

1. Selection Of Brokers: A broker is a member of Stock exchange and stocks can

only be sold and purchase through him. After selecting broker the investor has to buy or sell the stocks on his behalf.

Ensured that your Broker is registered with the SECP (Securities and Exchange Commission of Pakistan).

Example

ABC is an investor, he wants to purchase 100 shares of company ”pace” he will ask his broker to purchase the shares.

If the shares are under loss his broker will warn him to not to invest the company ”pace” but the ultimate decision power is with investors.

If ABC wants to sell his shares once again, his broker will sell his shares in the stock market on his behalf.

2. Placing An Order

There are three parties involved in the dealing of shares:

The stock broker

The client

Jobber

Cont.…

The stockbroker simply acts as agent and contacts the particular jobber in the stock exchange on behalf of the client. He does not disclose to the jobber whether he is a buyer or seller of the shares.

He, therefore, asks him to quote two prices:

I . The upper prices at which he is ready to sell the shares.

II . The lowest prices at which he is ready to buy the shares.

Example

Mr. Ali wants to sell one thousand shares of a Company. He contacts a broker dealing on the stock exchange.

The broker asks a jobber to give quotations. He does not disclose the jobber whether he wants to buy or sell the shares of a company.

The jobber gives two prices, one at which he is willing to sell and the other at which he is ready to buy.

Cont.…

If the broker is not satisfied, he can go to another jobber or ask the first one to make it closer (i.e. to reduce the margin between buying and selling).

If the broker is satisfied with the new quotation, he then contacts with his client informs him the bid of the share.

If the client agrees to the bid price, then bargain is struck.

3. Preparing the contract note: The stockbroker prepares a contract note, one copy of which is

given to the client; the second one to the jobber and the third remains with the broker. The contract note generally contains the 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 transaction

4. Settlement:

In case of ready delivery contract, the buyer pays the money and the seller delivers the securities one same day.

In the case of forward delivery contracts, settlements are done in a week or once in a month .