LAHORE STOCK EXCHANGE
Samir Ahmed
CEO and Managing Director
Positive growth indicates
increased investor
interest and confidence
in the stock market,
largely due to the
country’s improved
macro-economic
condition and the
regulatory reforms.
The Lahore Stock Exchange (LSE) had a
spectacular performance during the fiscal year
2002-2003. During this period the LSE 25-share
index rose 41% to 2491.5. The total stock
trading volume increased from US$ 13.84
billion in 2002 to US$ 27.05 billion in 2003, or
an increase of 40%. The market capitalization
of listed securities also increased from US$ 9.9
billion (RS 396.71 billion) on 7 January 2002 to
US$ 16.3 billion (RS 937.30 billion) on 31
December 2003, showing a 65% increase.
Positive growth indicates increased investor
interest and confidence in the stock market,
which is largely due to the country’s improved
macro-economic condition and the regulatory
reforms implemented by the Securities and
Exchange Commission of Pakistan as well as
the LSE.
There were continuing developments in the
governance structure of the LSE. In January
2003, the size and composition of its Board of
Directors were changed; it now numbers 10,
made up of 5 elected members, 4 non-
members nominated by the SECP, and one
non-member managing director.
The area of risk management remains the
highest priority. The LSE has strengthened its
margin requirement on trading exposures. The
risk profile of the Clearing House has improved
significantly. Keeping with its tradition of
technical innovation, the automated risk
management system, known as the Trade Risk
Filter, now monitors members’ exposures at the
order entry stage.
The LSE has remained on a par with
international standards in terms of automation.
Our indigenously developed trading system is
successfully working at the Karachi and
Islamabad Stock Exchanges. We are also
marketing this system to other emerging
markets. The LSE’s internet trading has greatly
increased. After a little longer than 2 years of
operations, more than 40% of trading is now
being conducted through the internet.
Recent divestment of state-run companies
through the stock market is increasing the
depth and breadth of the market; this bodes
well for the future growth of the market.
Demutualization of exchanges is being
considered by the Pakistani bourses in line with
global trends, to bring cost and efficiency
benefits to issuers and investors.
The LSE hosted the 3rd Annual General
Assembly and the 6th theme conference of the
South Asian Federation of Exchanges (SAFE) in
December 2003. The LSE was elected as the
Chairman of SAFE for 2004.
HISTORY AND DEVELOPMENT FUTURE OUTLOOK
The Lahore Stock Exchange (LSE) was
established in 1970 in Lahore, the provincial
capital of Punjab, Pakistan, under the 1969
Securities and Exchange Ordinance. The LSE
has now become a key institution in the
financial sector of Pakistan and has a
membership of 151 brokerage houses.
Currently, there are 559 listed companies,
having a listed capital of RS 296.17 billion
(approximately US$ 5.16 billion) with a market
capitalization of RS 937.30 billion
(approximately US$ 16.33 billion). The LSE plans for 2004 are to:
The activities of the Exchange have increased in
all areas since its inception. Its share turnover
has increased substantially, as has the number
of investors. However, much more must be
done. The goal is to bring the 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 to the Exchange.
• improve enforcement capabilities that
oversee the listed companies and brokers;
• implement a regular timetable for the Broker
System Audit, in order to build investors'
confidence;
• educate and inform the investing public;
• take necessary measures to reduce the cost
of compliance of listing regulations by the
listed companies;
• attract/encourage new companies to raise
capital through fresh equity offerings;
• further strengthen the mechanism of
redressing investors' complaints;
• continually improve our edge in IT (Ultra
Trade and related clearing, settlement and risk
management systems are continually being
upgraded and more features are being
introduced to take into account new
technology and new regulatory requirements);
• promote and sell Ultra Trade and related
systems to other stock exchanges, especially
among developing markets;
• further develop the futures contracts market;
and
• develop and launch a derivatives market
with new products.
FEDERATION OF EURO-ASIAN STOCK EXCHANGES YEARBOOK 2003/2004
PAGE 61