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  • Dec 29th, 2015
  • Comments Off on Pakistan Stock Exchange: a quantum leap for Pakistan’s capital market
On January11, 2016, the three stock exchanges of Pakistan will merge to become the Pakistan Stock Exchange (PSX). The unification of Islamabad Stock Exchange (ISE), Lahore Stock Exchange (LSE) with Karachi Stock Exchange (KSE) into a single entity is no simple merger. At present, there are 555 companies listed on these exchanges with a total market capitalisation of US $67 billion as of December 23, 2015. The investors on the exchanges include 1,886 foreign institutional investors and 883 domestic institutional investors along with about 0.22 million retail investors. There are also about 400 brokerage houses which are members of the three stock exchanges as well as 21 asset management companies. As an amalgamation of all these invaluable attributes, the PSX represents a quantum leap forward for the country's capital market.

The unification of these three entities is made possible through the combined efforts of myriad stakeholders. The vision of the Government of Pakistan and the Finance Minister was adopted by the Securities and Exchange Commission of Pakistan (SECP). The Apex regulator of the country, under the able leadership of its Chairman, has heralded this vision to stakeholders of the country's capital markets and the owners of the three stock exchanges have come together for the national interest. The Central Depository Company of Pakistan, the National Clearing Company of Pakistan have also played an important role in this process. The commercial, regulatory and IT teams of the stock exchanges have been working non-stop in close co-ordination with the SECP to ensure a smooth transition to single national trading platform for equity and debt securities.

The emergence of a single, national capital market will create a large liquidity pool through which scores of brokers shall be able to better serve existing and prospective investors throughout the country. The concurrent provision of the Exchange's new Internet Trading Platform named KITS will enable brokerage houses to provide their clients with real-time services without the need for large IT infrastructure. In turn, this shall enable the rise of small and medium-sized brokers that are highly focused on core business functions such as client acquisition and equity sales.

In tandem, the SECP continues to play a highly supportive role for the creation of Capital Market Hubs across the country. Resultantly, the people of major cities as well as other parts of the country will enjoy greater access to the capital markets. In subsequent articles, this section will highlight the key benefits of the Pakistan Stock Exchange for investors as well as companies of the country. It shall also present an overview of the broader capital market reforms and how the creation of the PSX propels the country's vision for the capital market to play an effective role in enhancing a culture of savings and investments among the people of Pakistan and provide a conduit for the growth of businesses and the economy.

Copyright Business Recorder, 2015


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