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Pakistan Stock Exchange -PSE

Stock Exchange

61 replies to this topic

#1
Rehan sh

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    How you see the de mutalization of all pakistani stock exchnages,What objective will be achived through this merger of market?

    From investors point of view ,pros and cons?

    how trnsactions will take palce?

    An other questions/informations etc.

    when transactoin under one platfrom will start?
    Note:Do your due diligence before making any investment decision.

    Thank You & Regards
    Rehan Sh


    #2
    Ayub

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    Demutualization of stock exchanges to reform capital market: President
    http://app.com.pk/en...218849&Itemid=2
    app44-19president-karachi.jpgKARACHI, Dec 19 (APP): President Asif Ali Zardari on Wednesday said that completion of the process of demutualization of stock exchanges in the country was a landmark achievement and a historic reformation of the country’s capital market. He said that the initiative will help promote sustainable growth of the market and in spurring the economic activity in the country. This he said during his meeting with a delegation comprising of representatives of Securities & Exchange Commission of Pakistan, Stock Exchanges of the country and leading Securities companies of the country here at Chief Minister House.

    The delegation included among others Muhammad Ali, Chairman SECP, Muneer Kamal, Chairman-Karachi Stock Exchange, Dr. Salman Shah, Chairman Lahore Stock Exchange, Muhammad Rashid Zahir, Chairman Islamabad Stock Exchange, Managing Directors of the Stock Exchanges, Haji Abdul Ghani, Dr. Yasir Mehmood, Syed Mukhtar Hussain Jafery, Akeel Karim Dhaidi, Arif Habib, Zafar Moti, Ameen Esa Tai,
    Yaseen Lakhani and others Governor Sindh Dr. Ishrat-ul-Ibad Khan, Chief Minister Sindh Syed Qaim Ali Shah, Finance Minister Dr Abdul Hafeez Sheikh, Provincial Ministers Pir Mazhar-ul-Haq, Murad Ali Shah, Agha Siraj Durrani, Ayaz Soomro, Sharjeel Memon, and Speaker Provincial Assembly Nisar Ahmed Khuhro and Sharmila Farooqi were also present during the meeting.
    Spokesperson to the President Senator Farhatullah Babar while giving details of the meeting said that the Demutualization Bill was approved in the joint sitting of the Parliament on March 27, 2012 and was enacted into law by the signatures of the President on May 7, 2012.
    Giving background, the Spokesperson said that the Pakistani stock exchanges were operating as non-profit companies with a mutualized structure wherein the members had the ownership as well as trading rights.
    This pattern created conflict of interest as members controlled the affairs of the stock exchange that resulted in lack of transparency in the operations and also compromised investors’ interest.
    He said that the corporatization and demutualization of stock exchanges has converted the stock exchanges’ structure from non-profit, mutually owned organization to for-profit entities owned by shareholders.
    Spokesperson said that the President during the meeting today complimented the Securities and Exchange Commission of Pakistan and the stock exchanges for their support to such a landmark achievement.
    The President said that the Government accords due importance and has always supported the capital market. He said that the passage of the Bill in the joint session of the Parliament clearly reflected the importance given to the stock exchanges.
    The President said that capital markets channel savings into investments which in turn leads to increased employment and output.
    He said that in developing countries like Pakistan, capital markets can play a great role in capital formation.
    He said that we need to make our stock exchanges a major source of capital formation. The President noted the steady progress made by capital market and restoration of the investors confidence and emphasized that more needs to be done to make the market more liquid and efficient to attract investors.
    The President reiterated that the Government believes in providing a level playing field to the private sector. He said that far-reaching financial and structural reforms have been introduced by the Government and now it was for the private sector to avail the available opportunities.
    It should step forward to raise capital through fresh debt and equity listings, he continued. He said that the debt market needs special attention.
    Spokesperson said that Chairman SECP during the meeting suggested that capital markets should be utilized for government borrowings.
    Agreeing to his suggestion, the President remarked that the listing of government debt on the stock market will help raise additional funds in a timely and documented manner. He urged the Ministry of Finance to consider the suggestion and take necessary measures for implementing this initiative.
    The President also expressed his support to promulgation of other laws mentioned by the Chairman SECP which included The Securities Bill, the SECP Bill, Futures Trading Act and Corporate Rehabilitation Act.
    The President urged the concerned standing committees of both the Houses to expedite finalization of these laws.
    While reiterating Government’s commitment to encourage a culture of corporatization, the President also emphasized that upon the need for further reforms and to support enhanced entrepreneurship and corporatization. The President, on this occasion also called upon Federal Board of Revenue to encourage corporatization through tax incentives.
    The President said that Pakistan was an emerging market with great potential for growth.
    He said that the country was offering attractive incentives to the investors by putting in place investment friendly regime. He emphasized upon the need to attract foreign investment both channelized through the capital market as well as direct.
    The President said, “we have come a long way from the market situation of 2008 after braving many challenges.”
    He said that structural changes in Stock exchanges will help expanding market outreach, improve investor protection and enhance liquidity.
    Expressing the hope that Demutualization would take our markets to new heights, the President also called upon the stock exchanges to introduce new products.
    These products, the President said, should be designed not only to cater to the needs of the local investors but also to attract foreign investors.
    The participants thanked the President for meeting and for his personal interest in further strengthening of the capital market and stock exchanges of the country.
    Quran 2:32. "Glory be to ALLAH, we have no knowledge except what You have taught us. Verily, it is You, the All-Knower, the All-Wise."

    #3
    Rayhan

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    Interesting Article to read with regards to De-mutualizaiton dated back 2012, when the concept was at the birth stage in Pakisan.

    http://www.brecorder.com/supplements/0:/1270439:demutualization-of-pakistani-stock-exchanges-the-break-of-new-dawn/

    #4
    Ayub

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    Demutualization of Pakistani Stock Exchanges: The Break of New Dawn
    http://www.brecorder...ak-of-new-dawn/

    December 20, 2012 IMTIAZ HAIDER0 CommentsE-mailPrintPDF
    Pursuing it as the top item on its agenda, the current management of the Securities and Exchange Commission (SECP) vowed to tread the path of demutualization in order to bring the Pakistani capital market on a par with global jurisdictions. Lending its full support and commitment to developing the local capital market, the government of Pakistan, promulgated the Stock Exchanges (Corporatisation, Demutualization and Integration) Act 2012 on May 7, 2012.

    The process of corporatisation and demutualization which began immediately with the enactment of the law stands completed on the historic day of September 2, 2012. Now our stock exchanges stand converted from non-profit, mutually-owned entities to for-profit companies owned by the shareholders. This transformation will make our capital markets more accessible to the international community, support strategic alliances with foreign counterparts, influx of state-of-the-art technologies, and make the exchanges more competitive investment destinations.

    This revolution promises to put Pakistan en route to introducing globally acclaimed governance standards, which in turn shall encourage investor participation and restoration of investors' confidence in stock exchanges that are better governed, more effectively supervised and inherently more efficient. Demutualization will also facilitate consolidation of brokers leading to financially strong entities which are better placed to generate market liquidity and expand market outreach through broker branch network and via internet/online/mobile technologies.

    The role of an efficient capital market in the economic growth and development of a country is of paramount importance. Stock exchanges are key national institution responsible for safeguarding public interest as they channel savings to industrial and business enterprises. The mobilisation of such resources for investment is certainly a necessary condition for economic well-being. Similar to other markets, capital markets are prone to volatility as demand and supply fluctuate. But unlike other markets, turmoil in capital markets can have far wider consequences on the rest of the economy. From the Wall Street crash of 1929 to the global financial crisis of 2008, we have witnessed how dislocations in capital markets can have negative impact on financial stability, economic growth, and the interests of public.

    The stock exchanges in many countries had been set up having a mutualized structure wherein the members have the ownership as well as trading rights. This structure inherently creates conflict of interest as members predominately control the affairs of the stock exchange which results in lack of transparency in the operations of the stock exchange and compromises investors' interest. Also, mutualized exchanges while focusing on short-term benefits are generally unable, or refuse, to undertake reforms which are in the long-term interest of the market. Although, there have been several reasons for demutualization in developed and developing jurisdictions, mainly in developed countries the urge was supported by global competition and technological advances in stock market operations whereas in emerging markets the drive for demutualization was a result of the perceived and actual conflict of interest.

    Consequently, in developed countries the initiative for demutualization was primarily from the stock exchanges and in developing jurisdictions the policy makers were compelled to intervene to foster the transformation. In the case of Pakistan we are proud to have followed the process in a harmonious manner. The constitution of an Expert Committee on Demutualization and Integration in 2004 to develop a comprehensive plan for demutualization and later the signing of a memorandum of understanding between the stock exchanges and the SECP in 2006 were steps to ensure a smooth transition. Upon the promulgation of the Act in May 2012, the SECP became entrusted with overseeing implementation of its extremely challenging timelines. The SECP ensured that all activities required for corporatisation and demutualization were completed within the stipulated 119 days of promulgation of the Act. Hence today, the successful corporatisation and demutualization of the stock exchanges represents a phenomenal achievement of not only the apex regulator but also illustrates the commendable role played by the stock exchanges in ensuring effective implementation of the law. This seamless transition of the stock exchanges with such massive reforms at the back end highlights the capacity and positively of the Pakistani capital markets to implement and absorb market reforms.

    An apprehension that remains associated with the post-demutualization scenario is that the stock exchanges as for-profit companies are free to pursue their commercial objectives and hence, their focus on regulatory activities is perceived to be diluted. However, another school of thought suggests that the demutualization of a stock exchange is not necessarily incompatible with self-regulation. An appropriate structure of self-regulation, which ensures segregation of commercial and regulatory role of the exchange is a technique to reduce the conflict of interest in its operations. The regulators across the world have adopted different models to address these conflicts.

    There are mainly four models commonly implemented for ensuring segregation, ie, (i) the Government Model, (ii) Limited Exchange SRO Model, (iii) Strong Exchange SRO Model and (iv) Independent SRO Model. In the 'Government Model' the regulation is performed by a government authority and the exchange is responsible for very limited supervision of markets.

    The examples include the UK, and France. Jurisdictions such as Hong Kong, Singapore and Dubai have adopted the 'Limited Exchange SRO Model' wherein a public authority is the primary regulator. However, certain regulatory functions tied to the exchange's market operation are delegated to the exchange. In other developed jurisdictions like the US Australia, Japan, Malaysia the 'Strong Exchange SRO Model' is in place where a public authority is the primary regulator, it relies on exchanges to perform extensive regulatory functions that extend beyond its market operations, including regulating member's business conduct. In the 'Independent SRO Model' although a public authority is the primary regulator it relies extensively on an independent SRO to perform widespread regulatory functions.

    The specific preference by policymakers is dependent on different factors including the size of the market and the stage of preparedness and development of the market. We in Pakistan have in the first phase adopted the strong exchange SRO model. However, to ensure potential conflict of interest in the said model, the segregation plan approved by the SECP requires the stock exchanges to constitute separate regulatory committees / departments that function totally independent from any committees/departments of the exchange that are involved in performing its commercial functions. The segregation has been envisaged through setting up of a Regulatory Affairs Department (RAD) that is headed by a Chief Regulatory Officer (CRO) and overall supervision of which vests with a Regulatory Affairs Committee (RAC), which mandatorily comprises of directors who do not represent and are not in any way connected with persons having trading rights. The RAC functions as a 'Chinese wall' between the regulatory functions and commercial activities of the exchange and is responsible for developing and measuring RAD's effectiveness in implementing the overall regulatory plan, processing all regulatory amendments, recommending budget and staff allocations for the RAD, and appointment of the CRO whose removal would require consent of the RAC. In addition, the board of directors of the demutualised entities is now dominated by independent directors, restricting representation of brokers/trading right holders from holding majority on the board. These independent SECP-nominated directors shall be replaced by representatives of strategic investor(s) and the general public after divestment of shares to them. However, to ensure good governance and transparency in the affairs of the exchanges, the SECP has the authority to appoint independent professionals as directors on the board of the exchanges over and above the elected directors, as is the case in most jurisdictions.

    In the demutualised set-up the shareholding rights of trading rights certificate holders are limited to 40%, whereas the remaining 60% shares that are currently lying in blocked account at the central depository will be offered for sale to the strategic international investor(s), and the general public in a 40:20 ratio. This arrangement has been put in place to eliminate the possibility of concentration of ownership in a few hands.

    The demutualization is essentially yet another step by the SECP in restructuring the capital market and market infrastructure institutions that can play an enhanced role in ensuring product innovation, market integrity and protection of investor interest. It will pave the way for strengthening the strategic positioning of the capital market while enhancing the competitiveness and efficiency of the Pakistani exchanges. The SECP stands firmly committed to introducing reforms to establish a fair, transparent and efficient market that engenders investor confidence and conforms to international levels of performance in today's highly competitive global environment. The writer is the Commissioner, Securities' Market Division, at the SECP. He has over 20 years' experience in finance, business, management, corporate governance, academia and marketing.

    The writer is the commissioner, Securities Market Division. He has over 20 years of experience in finance, business, management, academia and marketing.
    Quran 2:32. "Glory be to ALLAH, we have no knowledge except what You have taught us. Verily, it is You, the All-Knower, the All-Wise."

    #5
    ahmedkhan

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    View PostRehan sh, on 25 August 2015 - 11:09 PM, said:

    How you see the de mutalization of all pakistani stock exchnages,What objective will be achived through this merger of market?

    From investors point of view ,pros and cons?

    how trnsactions will take palce?

    An other questions/informations etc.

    when transactoin under one platfrom will start?

    I think other two exchanges were already working like a shadow of KSE so with centralization there will be not much difference in terms of sentiments but the most obvious benefit of demutualisation is that it leads to the separation of the ownership and control of stock exchanges from trading rights of its members, which eliminates the conflict of interest between exchange and broker members

    #6
    Rayhan

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    You can think of it also in the lines of Corporate Governance and how in the case of listed companies we have independent directors, all this would reduce conflict of interest and also help in bringing up technological adaptations and new investment opportunities as the bourse would be considered as an Entity which will have some price tag associated with it for its investors who will an ownership in the bourse. Keep in mind that with this will have much strict check on insider trading etc hence since 2012 it is mostly in process and keeps on facing resistance & challenges for a developing economy like Pakistan.

    One major issue when i was reading it few months back was with regards to number of total listed companies in KSE which are trading is way low and for de-mutualization price incestive to the Investors it should be upto certain level in terms of number of listed companies too besides volume trade.






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