FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT JUNE 2013
KARACHI STOCK EXCHANGE
KSE 100 Index closed at 25261 points on
December 31, 2013, showing a gain of
around 50% over this period.
Nadeem Naqvi
Managing Director
The year 2013 was mixed for the economy of
Pakistan. Positive indicators included sharp
appreciation in real estate and capital markets,
increase in worker remittances, rise in industrial
activity and Government’s commitment to the
program of IMF. Business sentiments also
showed positive signs with increase in private
sector credit off-take. However, challenges
of energy shortage, law and order, rising
inflation, lower tax to GDP ratio continue to be
major obstacles to sustainable growth. Overall
commitment and fiscal restructuring is needed
to keep economy on the track.
The real GDP growth in the outgoing FY 2013
was recorded at 3.6% and between 3-4% has
been forecasted for the FY 2014. Pakistan’s
economy has strong capacity to overcome the
challenges originated from internal and external
economic environment while struggling towards
achieving long term sustainable growth.
Government has also decided to privatize
the public entities and determination to cut in
subsidies to reduce the fiscal deficit
Global recovery has remained slow as analyzed
by the World Bank. Since 2009, developing
countries have started showing signs of
HISTORY AND DEVELOPMENT
The KSE is the biggest and most liquid
exchange amongst the three exchanges
of Pakistan. It came into existence on 18
September 1947. It was later converted and
registered as a company limited by guarantee
on 10 March 1949. From August 27, 2012,
KSE’s corporate structure was changed from
a ‘company limited by guarantee’ and it was
re-registered with the name and style of “Karachi
Stock Exchange Limited” as a public company
limited by shares, signifying the demutualization
of the Exchange in accordance with the
provisions of “Stock Exchanges [Corporatization,
Demutualization and Integration] Act, 2012”
(Demutualization Act/Act).
In 1991 the secondary market was opened to
foreign investors on an equal basis with local
participants. This measure, along with a policy
of privatization, has resulted in rapid growth of
the market since 1991.
Management
The KSE has an independent Board of Directors
(10 directors) with representation from the
Members of the Exchange & from the Corporate
coming out of financial crisis. The estimates
of growth of 3.2% during the year. The growth
in developing countries will still be slower than
what was previously expected.
KSE 100 Index which opened at 16905 points
on January 1, 2013 and closed at 25261 points
on December 31, 2013, showing a gain of
around 50% over this period. The benchmark
index touched historical high of 25579 points on
December 20, 2013. A total of, 560 companies
were listed at Karachi Stock Exchange with
the listed capital of Rs. 1,130 billion (US $ 11
billion) with the market capitalization of Rs.
6,056 billion (US $ 57 billion) as at December
31, 2013 The average daily traded volume in
the Ready market has also increased to 238
Million shares against 197 million shares traded
during the same period last year.
During this period the process of new listing on
equity & debt segment remained slow and only
three (3) companies were listed with the paid
up capital of Rs.4.5 billion ($43.16 million) and
six (6) debt instruments were listed amounting
Rs.9.8 billion ($ 93 million.
Community. Five directors are elected from
amongst the 200 members of the Exchange
and four non member directors are nominated
by Regulator i.e., SECP, the Chairman is elected
by Board from amongst non member Directors
whereas, Managing Director is ex-officio
member of the board.
Automation of the Exchange
KSE has a fully automated trading system with
T+2 settlement system whereby all trades
settle on the second day after the trade. Internet
based trading system was also launched in
December, 2004 to provide an additional facility
for investors to enter their orders. KSE has also
launched a single exchange-traded market for
trading corporate bonds in Pakistan using BATS.
KSE’s BATS provide live system based, on
screen electronic Trading Platform which offer,
market participants a transparent and efficient
trading system features and facilities crucial
for the Debt market Securities Trading. KSE
also launched Stock Index Futures Contract
and sector indices. This marks a momentous
achievement for the KSE
Unique Identification Number was introduced
to provide a traceable link between every
KSE is constantly upgrading IT platform and
endeavoring to put in place the technical
infrastructure for new products such as trading
of Government debt securities, Options
contracts & ETF’s. The Exchange is also
working with relevant constituencies to enhance
the attractiveness and operational ease of
existing products - such as Cash Settled
Futures Contracts, Margin Trading System,
Securities Lending & Borrowing - so that their
usage and volume of activity increases.
After the change of KSE’s corporate structure
from a ‘company limited by guarantee’ and
it was re-registered with the name and style
of “Karachi Stock Exchange Limited” as a
public company limited by shares, the front
line Regulatory functions of the Exchange
having been segregated into the Regulatory
Affairs Department (RAD) headed by the
Chief Regulatory Officer (CRO) who reports
to the Regulatory Affairs Committee (RAC) of
the Board of Directors, management of the
Exchange can now focus fully on product
and market development, customer service
enhancement and operational efficiency.
order entered at the trading system of the
Exchange. VaR based margining system was
also introduced in place of a slab based Risk
management system. The new RMS included,
amongst others, a new netting regime; a
margining system based on Value at Risk
(VaR) and Capital Adequacy. KSE has also
adopted the FIX protocol (Financial Information
Exchange) for both trading and market data.
The National Clearing & Settlement Company
and Central Depository System have also
been introduced. Transparency of the listed
companies has been enhanced with the
introduction of quality audits, quarterly financial
reports and timely dividend payouts. Corporate
governance is also now the part of the KSE’s
listing regulation.
Unique Identification Number was introduced
to provide a traceable link between every
order entered at the trading system of the
Exchange. VaR based margining system was
also introduced in place of a slab based Risk
management system. The new RMS included,
amongst others, a new netting regime; a
margining system based on Value at Risk
(VaR) and Capital Adequacy. KSE has also
adopted the FIX protocol (Financial Information
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