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7/21/2019 Project Report on Islamabad Stock ExchangeIse_2
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A Project Report on Islamabad Stock Exchange
By
Muhammad Idrees (5!"#
A project report submitted to the Department of Accounting & Finance, Faculty of
Management Sciences, International Islamic University Islamabad in partial fulfillment of
the reuirements for the degree of
MAS$ER %& B'SIESS A)MIS$RA$I%
(&IA*E#
)epartment o+ Account,ng - &,nance
&aculty o+ Management Sc,ences
Internat,onal Islam,c 'n,.ers,ty Islamabad
A project report on Islamabad stock exchange
!
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By
Muhammad Idrees (5!"#
MAS$ER %& B'SIESS A)MIIS$RA$I%
(&IA*E#
Subm,tted $o
*h/Ma0har 1ussa,n
)epartment o+ Account,ng -&,nance
&aculty o+ Management Sc,ences
Internat,onal Islam,c 'n,.ers,ty Islamabad
2une !3!
"
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*opyr,ght4!3! by Mr/ Man0oor Ahmad and Mr/ Muhammad Idrees/
All rights are reserved# $o part of this project report can be reproduced in any form or any
means such as photocopy or electronic media etc#%ith out prior approval of authors#
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Super.,sors *ert,+,cate
'his is certified that Mr# Muhammad Idrees ()*"+ student of M-A (!#) have completed
their project report entitled ./roject report on the Islamabad Stoc0 e1change2 under my
supervision# I have chec0ed this report and found it bonafide it %or0s of authors#
Mr# 3h Ma4har 5ussain
SU/678IS97
Assistant /rofessor
Dr# :aheer Abbass
5ead, Department of Accounting & Finance
Faculty of Management Sciences
International Islamic University Islamabad
;
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Dedication
We want to dedicate this project to our parents
Who pray for our success and to my teachers who guide us in
The whole of our education.
$AB6E %& *%$E$S
)
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*17 PAR$I*'6ARS PA8E
%s
3 I$R%)'*$I% A) E9A6'$I% %& S$%*: E;*1A8E *!
35A$?6
689@U'I9$ 9F S'93= 6>35A$?6
5IS'97 9F S'93= 6>35A$?6 I$ /A=IS'A$
*"
*"
*
*" $1E S$%*: E;*18ES %& PA:IS$A *)
'56 =A7A35I S'93= 6>35A$?6 (=S6
=S6 * I$D6>
=MI * I$D6>
=S6 !** I$D36S
'56 @A5976 S'93= 6>35A$?6 (@S6
5IS'97 9F @A5997 S'93= 6>35A$?6
*B
*B
*+
*C*C
*C
* IS6AMABA) S$%*: E;*1A8E *
S597' 98678I6< 9F IS6
I$'79DU3'I9$
'56 IS@AMA-AD S'93= 6>35A$?6 MAI$ 9-E63'I86S
MISSI9$ & 8ISI9$
79@6 9F S'93= 6>35A$?6
5I67A7357 9F IS6
DU'I6S A$D 76S/9$SI-I@I'I6S
!*
!!
!"
!
!;
!+
!C
*; RE8'6ARI$R< S$R'*$'RE %& $1E ISE "!
MI$IS'7 9F FI$A$36
S63U7I' 6>35A$?6 399MISSI9$ 9F /A=IS'A$
36$'7A@ D6/9SI'7 39M/A$
6@6M6$'S 9F 36$'7A@ D6/9SI'7 39M/A
"
"
";
")
"+
B
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59< 3D3
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'56 IS6!* I$D6> 35A7'
'9'A@ ASS6'S 'U7$9867
$6< @IS'6D DU7I$? '56 6A7S
'56 IS6 !* I$D6> ?57A/5
86%SS%R< )
S'88ESS$I%S A) RE*%MME)A$I%S B!
*%*6'SI% B)
RE&ERE*ES BB
6IS$ %& $AB6ES
S>% PAR$I*'6ARS PA8E %s
1 KSE STATESTICS AND INDCES ON 24, APRIL 2012 TABLE *+
2 CDC STATESTICS TABLE "
3 INDEX CALCULATION STAGE # 1 TABLE +
4 STAGE # 2 TABLE C
5 THE REPLACEMENT OF INDEX STEP # 1 TABLE ;!
6 STEP # 2 TABLE FOR NEW DIISOR ;"
C
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! AD"USTMENT OF DIIDEND STEP # 2 TABLE FOR NEW DIISOR ;
STEP # 3 TABLE ;;
$ FIE %EARS FINANCIAL HIGHLIGHTS OF ISE TABLE ;B
10 FIE %EARS MARKET PERFORMANCE OF ISE TABLE ;
ABBRE9A$I% 6IS$
IP%s INITIAL PUBLIC OFFERINGS
*&% CHIEF FINANCIAL OFFICER
'$S UNIFIED TRADING S%STEM
:SE KARACHI STOCK EXCHANGE
2S*"OINT STOCK COMPAN%
6SE LAHORE STOCK EXCHANGE
ISE ISLAMABAD STOCK EXCHANGE
:MI KARACHI MEE&AN INDEX
M) MANAGING DIRECTOR
*E% CHIEF EXECTIE OFFICER
$&* TERM FINANCE CRTIFICATE
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8M GENERAL MANAGER
M9 MARKET ALUE
SE*P SECURIT% EXCHANGE COMMISSION OF PAKISTAN
*)* CENTRAL DEPOSITOR% S%STEM
A>* ACCOUNT
)&Is DEELOPMENT FINANCIAL INSTITUTIONS
IAS INESTOER ACCOUNT SERICES
*)S CENTRAL DEPOSITOR% S%STEM
'I UNI'UE IDENTICATION NUMBER
**P6NATIONAL CLEARING COMPAN% OF PAKISTAN LIMITED
*SS NATIONAL CLEARING SETTLEMENT S%STEM
IP& INESTOR PROTECTION FUND
6IS$ %& )IA8RAMS A) 81RAP1S
S>% PAR$I*'6ARS PA8E %
! ROLES OF STOCK EXCHANGE !;" HIERARCH% OF ISLAMABAD STOCK EXCHANGE !+
REGULATOR% AUTHOURIT% OF ISE ""
; ELEMENTS OF CDC ")
) THE ACCOUNT HOLDERS OF CDC ")
B HOW CDC WORKS WITH STOCK EXCHANGE "+
+ ACTIITIES CHART "
C KSE 100 INDEX RECOMPOSITION DIAGRAM PIE CHART OF ISE ;+!* FUNDS GRAPH ;+
!! TOTAL ASSETS GRAPH ;C!" TOTAL LIABILITIES GRAPH ;C
! TOTAL LISTED PAID UP CAPITAL GRAPH ;
!*
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!; TOTAL NO OF LISTED SECURITIES )*!) TOTAL MARKET CAPITALI&ATION GRAPH )*!B ISE 10 INDEX GRAPH )!!+ TOTAL TURN OER OF SHARES )!
!CNEW SECURITIES LISTED DURING THE %EARS
)"! ISE 10 INDEX GRAPH )"
%R8AI?A$I% %& *1AP$ERS
'he first chapter tell about the past bac0ground and history of stoc0 e1changes# It also
describes the scope and significance of stoc0 e1changes#
'he "ndchapter is all about the introduction and history of the major stoc0 e1changes in
/a0istan# 'here are only three stoc0 e1changes in /a0istan, =arachi Stoc0 61change,
@ahore Stoc0 61change, and Islamabad stoc0 e1change# 'he roles of stoc0 e1change have
been also discussed in the chapter#
'he rdchapter gives the short overvie% of Islamabad Stoc0 61change# 'hen after this it
describe an introduction and bac0ground of the Islamabad Stoc0 61change# 'his chapter
is also gives the information about 8ision, Mission and objectives and hierarchy structure
of Islamabad Stoc0 61change#
'he ;thchapter tells us that ho% the Islamabad Stoc0 61change is operating by la%# It
describes the Security 61change 3ommission of /a0istan (S63/, 3entral Depository
!!
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3ompany (3D3, $ational 3learing 3ompany of /a0istan @imited ($33/@ and their
roles in IS6#
'he )thchapter is all about the trading procedure and to ho% the Inde1 is calculate of
Islamabad Stoc0 61change#
/revious five year performance of IS6 such as, the total value, 'otal turnover of shares,
Inde1, $e% securities listed during the years, total assets, total @iabilities etc has been
diagrammatically as %ell graphically represented in the Bthchapter#
At the end of the project %e have given some suggestions and recommendations for the
IS6 to improve and enhancing the performance#
Ackno@ledgement
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E;E*$I9E S'MMAR BR%:ER A**%'$
'he participants or -ro0ers are allo%ed to 0eep their beneficially o%ned securities
and also provide the custody services to their client# 'he -ro0ers maintain the other
three more accounts %ith 3D3,
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clearing companies can also join the central depository system in the capacity of
pledges for the purpose of ris0 management#
1% *)* %R:S I$1 S$%*: E;*1A8EG
)E$AI6E) PR%*E)'RE
'here are t%o partiesJ say party A and party -, -oth the parties have their accounts in
central depository company#
A transaction ta0es place bet%een party .A2 and party .-2 at stoc0 61change# /arty
.A2 sells his securities to party .-2# 'he /arty .A2 sent reuest to his participant to
transfer his shares to party .-2 account# /articipant enters transfer reuest and data of
into system# In 3DS, Shares are transferred electronically from party .A2 account to
party .-2 account# Intimation about transfer of securities are sent to both parties#
"
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$1E SER9I*ES PR%9I)E) B< *)*C
It started investor account services (IAS in !, through this service the retail
investors can also directly open account %ith 3D3#
In "**" the central depository company started 'rustee and 3ustodial Services ('&3
service by listing the mutual funds (open & close ended and voluntary pension
scheme
In "**C the Share 7egistrar Services (S7S has been introduce by the 3D3# through
this service the facilities of transfer, registration & verification of shares and the
records of the securities is provide on the behalf of the issuer company#
$1E *E$RA6 )EP%SI$%R< S
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'he movement of cash is also performed by central depository system# 'he transfer of
cash from one account to another account %ith or %ithout security movement is
performed by 3DS#
'he pledge call and release of security is performed by 3D3#
For the settlement of transaction the delivery versus payment of securities is
performed by central depository system#
hat are the bene+,ts o+ central depos,tory system (*)S#
'his system gives a lot of benefits some of them are the follo%ings
'he 3DS have reduced the ris0 of lost and damaging of certificates#
'here %as a lot of paper %or0 at the stoc0 e1change due to the 3DS this paper %or0
has been eliminated# $o% the transfer of securities is done electronically#
9n the transfer in 3DS there is no stamp duty#
A lot of time %as reuired in transfer of o%nership but no% through 3DS it transfers
in fe% minutes#
Save a lot of time of the employees
?ive uic0 response to o%ner
It ensures the safe custody of securities#
'here is no ris0 of duplicate or forged#
*)* S$A$ES$I*S
Per+ormance 2une DF !3 2une DF !33 March D3F !3!
o o+ shares ,n *)S (,n Bn# "H/35 HD/H! 5/="
Market *ap,tal,0at,on o+
shares ,n *)S (,n $r,ll,on#3/D 3/=5H 3/H=3
J o+ shares ,n *)S @/r/t/ total
share cap,tal (Exl/8%P#H/HJ HD/5HJ H/HJ
$otal number o+ In.estor
Accounts5!F"3D 5!FH= 53F3!
umber o+ Secur,t,es ,n !/HH D/DD! D=/H
!
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In.estor Accounts (,n Bn#
A$I%A6 *6EARI8 *%MPA< %& PA:IS$A 6IMI$E) (**P6#
'he $33/@ stand for $ational 3learing 3ompany of /a0istan @imited# $ational
3learing 3ompany of /a0istan @imited provides the clearing and settlement services
to all three stoc0 e1changes in /a0istan# -efore the incorporation of $ational 3learing
3ompany of /a0istan limited the clearing and settlement %as done by each stoc0
e1change separately# 'he $ational 3learing 3ompany of /a0istan provides its
services to all the three stoc0 e1change, =arachi stoc0 e1change =S6, @ahore stoc0
e1change @S6, and the Islamabad stoc0 e1change IS6# 'he $ational clearing
company of /a0istan %as established on third Euly "**! in order to manage and
operate $ational clearing and settlement system ($3SS# 'he company %as fully
operational in the year of "***; by handling the settlement and clearing of all the
boo0 entry securities through $3SS#
'he national clearing company of /a0istan play very important role in the capital
mar0et of /a0istan by providing their services# All those %ho are involve in the
trading of shares in any one stoc0 e1change of /a0istan, the asset manage companies,
financial institutions and mutual funds, are the clients of the $ational 3learing
3ompany of /a0istan limited#
'he $33/@ operations are governed through the follo%ing
'he "** regulations of $33/@
'he "** procedures of $33/@
'he "**) 3learing house rules
And the companies ordinance !C;
$he *SS
'he $3SS stand for $ational 3learing and Settlement System/'he $3SS provide the
clearing and settlement services to the all three stoc0 e1changes of /a0istan# 'he
$3SS is fully electronic settlement system# 'he $3SS started its live operations from
December ";, "**;# 'he main purpose of $ational 3learing and settlement system is
to replace the individual clearing of all the three stoc0 e1changes of /a0istan#
"
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$1E SER9I*ES %& **P6
'he $3SS help and provide their services to all the three stoc0 e1changes and
clearing members for the clearing and settlements of transactions# 'he services
provided by $33/@ through $3SS are the follo%ingJ
-ro0er to bro0er (-'- delivery system#
Institutional delivery system
3ross e1change netting
Margin Financing module
Fully automatic pay and collect system
'ariff collection through pay and collect
$etting of future mar0et transactions %ith regular mar0et trades
7egistration of uniue identification number (UI$
Automatic handling of corporate actions of securities held in 3DS bloc0ed account
3learing and settlement facilities through the $3SS for the trades and transactions
carried on unified trading system (U'S platform of @ahore and Islamabad stoc0
e1changes#
7is0 management of trades and transactions#
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A*$I9I$IES *1AR$
;
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)
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*1 7 5
$1E $RA)I8
PR%*E)'RE A)
I)E;*A6*'6A$I%
$1E $RA)I8 PR%*E)'RE %& ISE
'he trading in a stoc0 e1change means the buying and selling of securities# 'he
buying and selling of securities on a stoc0 e1change involved the follo%ing steps
%hich are the
B
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Step 3
Select,on o+ Broker
For the investor to trade a security in stoc0 e1change he should first select the bro0er
for the trading of security# -ecause the bro0er is the authori4ed member of stoc0
e1change# For the investor only the bro0er is the legitimate person %ho can trade on
the behalf of investor a security# 9rders are given by the investor to buy or sell the
specific security for him through call or visiting physically to the bro0erage house#
Step !
Plac,ng o+ %rder
/lacing of order in the stoc0 e1change for the trading of security is the second step
then# 'he follo%ing three parties ta0ing part in dealing of sharesJ
'he stoc0 -ro0er
'he client (investor
'he jobber
'rading procedure is facilitate by the bro0er and %ho then contact to the specific
jobber on the behalf of his client in stoc0 e1change# 5e does not told anything about
himself to the jobber %eather he is a buyer or seller of the shares# For this reason the
bro0er as0s the jobber to uote t%o pricesJ
I 'he higher price at %hich he %ill be ready to sell the shares
II 'he lo%er price at %hich he %ill be ready to buy the shares
For instance, Mr# Ali %ants to sell one hundred shares of 6ngro 3ompany# 5e informsthe bro0er dealing on the stoc0 e1change# 'he bro0er as0s the jobber to give his
uotations for the 6ngro company limited shares# 'he bro0er does not lea0 out his
position to the jobber %hether he %ants buy or sell the shares of the company# 'he
jobber gives the t%o prices, one at %hich he %ants to buy and the other at %hich he is
ready to sell# For e1ample, the uotations given by the jobber are 7s# "!#* and 7s# ""
in hundred# So 7s# "!#* is the price at %hich the bro0er %ants to buy the share and
sell it at a price of 7s# ""per share# If the bro0er is not satisfied %ith this uotations he
can contact to another jobber or contact %ith the first one to reduce the margin
+
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bet%een selling and buying price# 9n the other hand if the bro0er is satisfied %ith this
ne% uotation then he informs his client about this bid price of the share# $o% if the
client agrees %ith this ne% uotation price the bargain is ta0e place#
Step D
Preparat,on o+ *ontract ote
/reparation of contract note is the third step of trading procedure# 'he contract note is
prepared by the stoc0 bro0er# 'he contract note have three copies, one copy of contact
note is send to the client, the second is given to the jobber and the third one 0eep %ith
himself#
'he informations mentioned in the contract note are as follo%
'he name the address of the bro0er
'he name and the address of the jobber
'he commission of the bro0er charged
'he bid price and the type of the share
And the date of transaction
Step
$he Settlement
'he settlement of the transaction is the final step of the trading procedure# 'he
transaction is settled according to the follo%ing conditions,
In case of ready delivery contract the transaction is settled on the current day, the
buyer pay the money and the seller deliver the securities#
In case of for%ard delivery contract the transaction settlement is done once in %ee0 or
in a month#
9n the date of settlement the sale and purchase price differences %ill be paid %ithout
any delivery of securities# If the both parties agree to postponed the deal to the ne1t
settlement date they can do it#
C
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IS6AMABA) S$%*: E;*1A8E I)E;
'he Islamabad stoc0 e1change used totally different inde1 from the rest of the t%o
stoc0 e1changes of /a0istan# 'he =arachi stoc0 e1change used the =S6!** inde1 and
the @ahore stoc0 e1change used @S6!*! inde1# And the inde1 used by Islamabad
stoc0 e1change is IS6 !* inde1# 'he inde1 used by Islamabad stoc0 e1change is
composite inde1# 'his %as developed by a company %hich name is vital information
(pvt @imited company# 'his company is a financial and data base company#
:SEC3 Index
=S6!** inde1 is a benchmar0 by the help of %hich the performance of the stoc0
price can be compared to over a period of time# 'his sho% and teach the investors a
sense of ho% /a0istan stoc0 mar0et is performing#
=S6!** inde1 %as developed %ith the base value of !*** points in the $ovember
!!# =S6!** inde1 is consisting of !** companies# 'hese !** companies are
selected on the basis of sector representation and highest mar0et capitali4ation %hich
cover the C*K of the total mar0et capitali4ation of the rest of the companies %hich are
listed on the stoc0 e1change# In the total ) sector, ; companies are selected on the
basis of highest mar0et capitali4ation in %hich a company represents only one sector,
and in it 9pen6nd mutual fund sector are not included and the remaining BB
companies are selected on the basis of largest mar0et capitali4ation but in descending
order#
R'6ES &%R $1E SE6E*$I% %& S$%*:S
'he criteria for the selection of stoc0 inclusion in the recomposition of =S6!**
inde1 are as given belo%#
Rule 7 3
'hose stoc0s %ill be selected %hich sho%s the largest mar0et capitali4ation in each of
the ; sectors of =arachi stoc0 e1change e1cluding openend mutual funds sector#
Rule 7 !
'he remaining inde1 places (in this case of BB are chosen up by the largest mar0et
capitali4ation companies in the descending order#
Rule 7 D
'he company %ill not be considered for the recomposition of =S6!** inde1 %hich
has been banned for trading or declared $on tradable and on defaulter counter in the
preceding B months from the date of recomposition#
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A number of ; top sector companies on the basis of mar0et capitali4ation may also
ualify for inclusion#
ME$1%)%6%8< &%R $1E *A6*'6A$I% %& I)E;
'he =S6 !** inde1 represents a bas0et of the number of shares outstanding and its
prices# 'he value and %orth of the bas0et are compared continuously to some starting
point or base period# For the =S6!** inde1 $ovember !! is the base period# For
the simplicity total mar0et value of the base period has been adjusted to !*** points#
So !*** points is the value %hich has been assigned for the total mar0et value of the
base period (!!# 'o 0no% about ho% the =S6!** inde1 calculation, lets ta0e an
e1ample of three stoc0s for the base period of !!#
@et suppose a share .>2 %hich has a price of 7s !* and the total number of share
outstanding is )****, so multiply the price of share %ith the number of share
outstanding it %ill give a mar0et value of stoc0 .>2 7s *#) million for the base period#
'he same process is repeated for stoc0 .2 and .:2 %hose prices are 7s#!) and
7S#* and the number of share outstanding are !***** a !)**** respectively# So the
stoc0 .2 give !#) million and stoc0 .:2 provided ;#) million of mar0et value for the
base period respectively# 'hese three mar0et values are added up and set eual to
!*** to form base period value# All the future mar0et %ill be compared to this base
period mar0et value and inde1ed form#
I)E; *A6*'6A$I% S$A8E 7 3
(-a
s e
period valueH-ase DivisorN!*** O (B,)**,***HB,)**,***N!*** O!***
S$A8E 7 !
Inde1 value as on Day "
;*
Stocks Shares pr,ce
(Pak Rupees#
umber o+ share
outstand,ng
Market 9alue
(Pak Rupees#
; 3 5F 5F
< 35 3F 3F5F
? D 35F 5FF
$otal Market *ap,tal,0at,on K =F5F
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Stocks Share pr,ces
(In Pak Rupees#
umber o+ Share
%utstand,ng
Market 9alue
(Pak Rupees#
; 3 5F "F
< 35 3F 3FHF
? D3 35F F=5F
$otal Market *ap,tal,0at,on K "F35F
So to find the inde1 for this %e %ill use the follo%ing procedure
Index K ("F35F >=F5F# L3 K 33
Since the formula for calculating =S6!** inde1 isJ
Inde1 O Psum of shares outstanding (current priceH-ase period valueQ multiply by
!*** 97
Inde1 O PMar0et capitali4ation H-ase divisorQ N !***
$1E :SEC3 I)E; REC*%MP%SI%
'he recomposition of the inde1 %ill reuired semi annually overtime# For the re
composition of =S6!** inde1 rules falls into t%o general categories#
;!
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N
D
E
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RE
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C
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O
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R
U
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I
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E
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AS
E
D
R
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E
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L
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A
R
K
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A
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ES
A/ SE*$%R R'6ES
B/ MAR:E$ *API$A6I?A$I% R'6ES
*/ R'6ES &%R E ISS'ES
A/ SE*$%R R'6S
'he deletion and selection of companies on the basis of top stoc0 capitali4ation# 'he
; =S6 sectors are governed by the t%o rules recommended for selection criteria#
,# $,me Base Rule
A company can enter into inde1 by becoming the largest in its sector and maintain this
position for t%o consecutive recomposition periods#
,,# 9alue Based rule
;"
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A company can enter into inde1 by becoming the largest in its sector up to !*K
greater capitali4ation value than the present largest and maintain this position for one
recomposition period#
A# *ap,tal,0at,on rule
3apitali4ation rule given the selection and deletion of companies on the basis of
among the largest capitali4ation# 3ompanies in the stoc0 mar0et only time base rule is
applied in this rule#
,# $,me Based rule
A company can be enter into the inde1 %hen it e1ceeds mar0et capitali4ation value
from the last stoc0 in the inde1, and maintain this position for the t%o recomposition
periods# 'he lo%est capitali4ation company is automatically pushed from the inde1#
Rules +or ne@ ,ssues
A ne% listed company can also ualify for the inclusion of inde1# If its mar0et
capitali4ation is at "K of the total mar0et capitali4ation#
1o@ the ReCcompos,t,on o+ :SEC3 ,ndex take placeGIn recomposition %hen some companies go out of the inde1 at the same time some
companies are entering the inde1, so this %ill affect the inde1 because of the different
si4e of capitali4ation of the outgoing companies and the ne% entering companies# So
to maintain the inde1 same and constant should be made an adjustment in the base
divisor#
@et for the Day " =S6!** inde1 is !!**, and the inde1 mar0et capitali4ation is
+!)****# @et suppose the mar0et capitali4ation for Day rd %ould be 7s# !,"**,***#
'his is because of the addition and deletion of companies on the basis Sector rule and
Mar0et 3apitali4ation rule# 'his ne% mar0et capitali4ation %hich also 0no%n as
7evised Mar0et capitali4ation is calculated just after the end of closing trading session
on Day "#
'he ne% divisor for the inde1 for =S6!** inde1 is as follo%s#
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$e% divisor O mar0et capitali4ation (Day N !***
Inde1 (Day "
So in order to get the ne% divisor
$e% Divisor O !,"**,*** N !***
!!**
$o% %e %ill get ne% divisor (Day
$e% divisor O !,**,*
$he ,mpact o+ replacement o+ stock ,n the ,ndex/
As it is e1pected that on the Day at the opening of trading the stoc0 R
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So the ne% divisor is larger than the previous divisor because of the greater mar0et
capitali4ation than that of previous mar0et capitali4ation before replacement#
S$EP % 7 !
$e% divisor application on day
Stoc0s stoc0 prices (7s $o of share outs M #8 (7s
> !;#!B )*,*** +*C,***
< )!#** !B+,*** C,)!+,***
: !#)* !)*,*** ;,+"),***
'9'A@ !,)*,***
So the inde1 on day %ill be
Inde1 O Mar0et capitali4ation N !***
$e% Divisor
O !)**** N!***
!";););)#;)
Inde1 (Day O !!"*
$1E A)2'S$ME$ %& )I9I)E)
Say a company >: announce cash dividend of !* percent on its share and the boo0s
of accounts closing date started from the ; thday #no% it %ill adjust the dividend on the
closing of the rdday#
@ets ta0e an e1ample ho% to determine the adjustment of dividend
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'he rdday divisor !";););)#;)
S$EP 7 3
'o calculate the revised mar0et capitali4ation %e %ill first determine 61dividend
price of stoc0 >, from this the ne% divisor for the day rd%ill also be come out#
S'93= .>2
/A7 8AU6 9F S'93= .>2 /67 S5A76 !* /67 S5A76
MA7=6' 8A@U6 9$ 7DDA 7S !;#!B /67 S5A76
3AS5 DI8ID6$D !* /6736$'
Amount of cash (7s dividend per share O par value N dividend percentage
O !* N !*K
O !* N #!*
O !
/rice of share at 61 dividend O M0t price of share cash dividend
O !;#!B !
O !#!B
Step 7 !
'he stoc0 > share price is adjusted after the closing of rdday no% to calculate the
ne% divisor for the ;thday
Stoc0 price Hshare $9 of shares outstanding M0t value of shares
> !#!B )*,*** B)C,***
< )! !B+,*** C,)!+,***
: !#)* !)*,*** ;,+)*,***
7evised M0t capitali4ation !,**,***
;B
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For this the ne% divisor %ill be
$e% divisor O (7evised mar0et capitali4ation>inde1 of rdday N !***
$e% divisor O (!,**,*** > !!"* N !***
$e% divisor O !",;!*,+!;#"
S$EP 7 D
Inde1 on the ;thday
Stoc0s price of share no of shares outstanding M0t value (7s
> !;N )*,*** +**,***
< )! !B+,*** C,)!+,***
: !#)* !)*,*** ;,+"),***
M0t capitali4ation !,;",***
Inde1 O (M0t capitali4ation > ne% divisor N !***
O (!,;",*** H !";!*+!;#" N!***
O !!
;+
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*1AP$ER 7 =
$1E &I9E
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FI86 6A7S FI$A$3IA@ 5I?5@I?5'S 9F IS6
Income in the stoc0 e1change araising from trading listing and similar other activities# 'he
revenue in the income statement %as gradually increased during the first t%o years and come
do%n slightly in "**C because of the economic crises in "**CH*# And after that %hen stoc0
e1change recovered itself it increases its revenue tremendously in "*!*H!!#%ith the
increasing of revenue the administrative e1penses also increases respectively# 'his result
increase in the income after ta1 because of the increase in total revenue#
In the balance sheet the total assets sho% much fluctuations on increasing trend and the
liabilities of the stoc0 e1change also increases during the five previous years# Investment
properties of the stoc0 e1change are those assets capitals %hich are held for rental purposes
;
I*%ME A)
E;PE)I$'RES
!" !H ! !3 !33
7686$U6 +#) ;#+B #; !!+#); +B+#BB
ADMI$IS'7A'I86 6>/6$S6S ;"# )C#)C +#!) !B# !BC#C
FI$A$36 39S' $I@ $I@ !B#;) +B#C" !;"#"+
I$39M6 -6F97 'A> #" )*#) !#)+ );C#+ !*"#B;
I$39M6 AF'67 'A> "+#+) C#+ +#)" "C)#)! B
BA6A*E S1EE$
/79/67' A$D 6TUI/M6$'S !,*CB#C !,)B+#! ",+;)#" "#;";#B" ",!#B
I$86S'M6$' /79/67' $I@ $I@ $I@ !,*)*#; !,*;;#**
@9$? '67M I$86S'M6$' B)#" ;C# CC#*! C)#+C C+#;
3U776$' ASS6'S *+#! "BC#"B !BC#"C ";#*+ "C)#;!
'9'A@ ASS6'S !,;B"#;; !,C!#"" ,*"B#* ,C")#!+ ,+;+#*!
FU$DS C#B ;!B#C! )#C) B*#;) !,*+)#**
$9$ 3U776$' @IA-I@I'I6S BC#!C !,C+#+ ","*#CB !,)"B#*+ +#+"
3U776$' @IA-I@I'IS !*;#BB CB#BC #) C!#+C )""#C)
'9'A@ @IA-I@I'I6S !*+"#C; !;+;#;! "B*#;) !*+#C) !;B*#)+
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and not for their o%n uses and resale purposes# 'he liabilities in "**C decreases due the
economic crashed in /a0istani stoc0 mar0et# 'hen increases after that as total assets of the
Islamabad stoc0 e1change increases#
$%$A6 9A6'E PIE %& ISE
!"#".$%
#!&''.&&
.'&
*.'#"!'.
#!&*.&&
%".*.*
PROPERTY AND E+UIPMENTS INVESTMENT PROPERTY LONG TERM INVESTMENT
CURRENT ASSETS TOTAL ASSETS FUNDS
NON CURRENT LIABILITIES CURRENT LIABILITIS
'his pie represent the total value of the firm %hich includes the property and euipment,
investment property, long term investment current assets, funds and current and noncurrent
liabilities of the Islamabad stoc0 e1change# During the years "*!! the total value of the
property and euipment 7s "!#B millions# 'he investment in property is 7s!*;; millions,
the long term investment C+#;, the total assets of the IS6 is 7s+;+#*! millions and the funds
available to IS6 7s!*+) million and the noncurrent liabilities is 7s +#+" and the current
liabilities is 7s!*+) millions#
)*
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&& && &&% & #
&
&&
'&&
$&&
&&
#&&&
#&&
"%.$ '#$.# "%*.*
$%&.'*
#&*
FUNDS
FUNDS
'he stoc0 e1change raises funds through bro0erage houses# 'he commission %hich is paid on
the each transactions of the securities , the annual fee of bro0erage houses, the registration of
securities and that of the investors account so funds for the stoc0 e1change is continuously
increasing during the past five years #
&& && &&% & #
&.&&
#!&&&.&&
!&&&.&&
"!&&&.&&
'!&&&.&&
#!'$.''#!%#.
"!&$."&
"!*.# "!'.
TOTAL ASSETS
'otal assets of IS6 increases gradually from year to year by the previous five years
%hich sho% a good and healthy sign for the performance of the stoc0 e1change itself
as %ell as for the sta0eholders of the Islamabad Stoc0 61change#
)!
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&& && &&% & #
&
*&&
#&&&
#*&&
&&&
*&&
"&&&
#&.'
#''.'#
$"&.'*
#%&.*
#'$&.*
TOTAL LIABILITIES
TOTAL LIABILITIES
As the total assets of the stoc0 e1change increases, the total liabilities are increases for
the first three years and then decreases in the last t%o years during the previous five
years# 'he decrease in liabilities sho%s that there %ill be increase in the o%ners
euities# It means the bro0ers %ill receive more %hen decreases in the liabilities#
&I9E
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the first t%o years %hile from "**C and on%ard it sho% the increasing trend in the total paid
in capital#
(&&$/&) (&&/&) (&&/&%) (&&%/#&) (&/##)
&
&&
'&&
$&&
&&
'%**#
$&.'#*.$* $.%$
TOTAL LISTED PAID UP CAPITAL(Rs.Bn)
It indicates the total capital of the stoc0 e1change %hich is funded by shareholders# 'he paid
up capital is less than that up total companys capital# 'he listed paid up capital is increasing
from year to year continuously during previous five years# It means that more and more
peoples %ant to invest in stoc0 e1change %hich is a good sign for the performance of IS6#
(&&$/&) (&&/&) (&&/&%) (&&%/#&) (&/#)
"*
'&
'*
*&
**
$&
$*
&$$
'
$$%
$'
TOTAL NO.OF LISTED SECUTITIES
'his graph sho% the numbers of listed securities during the previous five years #During
this period the numbers of listed securities %as increased and decreased# During the
year "**+the total numbers %as "BB and the in "**C it decreased to ";C due to the
mar0et crashed in "**C#In "** this again increased to "B+ and the "*!* it increased to
"B#during the year "*!! the total listed securities on IS6 %as "B;#
)
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(&&$/&) (&&/&) (&&/&%) (&&%/#&) (&/##)
&
*&&
#&&&
#*&&
&&&
*&&
"&&&
"*&& "&$&.$
#&*.&
$#.$%
$#.&
TOTAL MARKET CAPITALIZATTION(RS.Bn)
'his graph of the total mar0et capitali4ation of the IS6# 'otal mar0et capitali4ation of
is eual to the sum of share outstanding multiply by it shares price# 'he total mar0et
capitali4ation of the IS6 during the "**+ %as 7s *B*#B billion %hich %as decreased
to 7s !+*)#*" during the year "**#Again in "*!* this stared increased and reached
to the 7s "B"!#*+ billion in "*!!#
(&&$/&) (&&/&) (&&/&%) (&&%/#&) (&/##)
&
*&&
#&&&
#*&&
&&&
*&&
"&&$ '%.$'
##".&"
''#.#*
."
ISE 10 INDEX
);
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(&&$/&) (&&/&) (&&/&%) (&&%/#&) (&/##)&
#&&
&&
"&&
'&&
*&&
$&&
"$.*
*$%
.%
*.#
"."'
TOTAL TURN OVER OF SHARES IN MILLIONS
'he graph that the total turns over of the Islamabad stoc0 e1change %as in decline from
previous five years# From "**C the total turnover of the shares decreased from 7s )B
millions to"+"#+ millions and then 7s "")#!+ million in "*!* and it further decreased to 7s
+#; million during the year "*!!#
&
'
$
(
#&
#
#'
#$
#
)
#*
#"
*
NEW SECURITIES LISTED DURING THE EARS
NEW SECURITIES
LISTED DURING THE
YEARS
'he graph sho% the numbers of ne% securities listed during the previous five years# 'he
numbers of ne% securities during "**+ %as !" %hich %ere decreased to + in "**C due to
economic crises# In "** this number increased to !) and then decreased to !in "*!*#in
"*!! just ) ne% securities %ere listed in Islamabad stoc0 e1change#
))
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(&&$/&) (&&/&) (&&/&%) (&&%/#&) (&/##)
&
*&&
#&&&
#*&&
&&&
*&&
"&&&
#$ '%.$'
##".&"
''#.#*
."
ISE 10 INDEX
ISE #& INDEX
'he inde1 of Islamabad Stoc0 61change %hich is IS6 !* inde1 sho%s much fluctuation
during the previous five years# In "**CH* it goes do%n from "+;#B; to !+!#* points
because mar0et crashed in "**C# -ut after that it recover itself again and started increasing
and reached to ";;! points during "*!*, and during the year "*!! its comes to "+""#C
points#
)B
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86%SS%R share
'he smallest part of o%nership in a company is called the share# shares
)+
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I/ *ommon stock J
3ommon stoc0 holders are the o%ner of the company# 'hey have the right of vote to
elect the board of directors# 3ommon stoc0holders received dividend but after the
preferred stoc0 holders#
II/ Pre+erred stock /referred stoc0 holders have no right of vote# 'hey have preference over the common
stoc0 holders in dividend payment# Dividend is pay before to preferred stoc0Hshare
holders and then to common share holders#
!/ *ap,tal ga,n
It is the appreciation in the price of the share#
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D
I
V
I
D
E
N
D
S T
O
C
K
D I
V I
D
E
N
C
A
S
H
D I
V I
D
E
N
Dividend is that part of earning %hich is distributed among the share holders#
Dividend is paid to shareholders of the company# Some companies are not paying
dividend %hich do not pay dividend usually give capital gain# Divided have t%o
types#
I. Stock ),.,dend*
It is the type of dividend in %hich additional shares is given to shareholders of the
common stoc0# -y the stoc0 dividend the o%nership of the shareholders remains
unchanged# 'he par value of the share is also not reduced#
II. *ash d,.,dend*'his is the payment of dividend in cash form to shareholders on each share they have
o%n of the company#
=/ Stock spl,t
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I/9 stands for initial public offerings#
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'hese are just li0e bonds %hich are issued by the companies to generate the funds
from general public# 'he investor receives interest from the companies by purchasing
their 'F3s#
3H/ Exchange membersh,p
'here are four types of e1change membership#
I/ Spec,al,st
'hese members are also 0no%n as mar0et ma0er# Specialists perform t%o major roles,
first they serve as a bro0er to match buy and sell orders and handle special limit
orders %ith member bro0ers# Second major role of the specialist is to act as a dealer to
maintain a fair and orderly mar0et#
II/ *omm,ss,on broker
'hese are the members %ho buy and sell (trading on the behalf of his customer
(investor# 5e receives commission for rendering this service from both the parties thebuyer and the seller#
III/ &loor broker
'his is the independent member of stoc0 e1change and %ho acts as a bro0er on the
behalf of other members#
I9/ Reg,ster traders
'hese are the members %ho use their membership to buy and sell for their o%n
account# 'hey save commission on their trading#
B!
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!
"#
!s
M$
!%
#&'!
"#!s
L
&'!"
#!s
*
'!
&s$+
#
,
#-
$+'
!"#!
$ypes o+ orders
I/ Market order
It is an order %hich is given by the investor to his commission bro0er to buy or sell a
security at the best current price#
II/ 6,m,t order
In this order an individual placing a limit order specifies the buy or sell price# For
e1ample if the price of the 6ngro company private limited is currently at 7sJ ;* and
Mr# .A2 %ants to buy it only %hen its price come do%n to 7sJ ), so Mr# .A2 %ill
B"
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specifies the limit order to his bro0er, and %hen the share price drop to 7sJ ) the
bro0er %ill buy the share for Mr# .A2#
III/ Short sale
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3/ 6ong pos,t,on
'his is the position in %hich investor belief that in some future time the price of the
stoc0 %ill be rise and due to that reason investor purchase the stoc0# 'he investor sell
this stoc0 %hen the price of the stoc0 goes up and earn profit#
!/ Short pos,t,on
In this position the seller does not o%n the security they only borro% the security from
bro0er and sale in the open mar0et at current price %ith the e1pectation that the
security price %ill be fall do%n in future and the security %ill be bac0 to the bro0er
from %hich it %as borro%ed#
!3/ Marg,n transact,on
Margin transaction means buying the security %ithout having the enough cash# In
margin transaction, the investors provide a portion of cash to buy the security and
borro% the rest of money from bro0er#
For e1ample if you %ant to buy !**** shares of 1y4 company and each share is at the
rate of 7s !* then the total amount need to ma0e the transaction is 7s!*****, but the
investor have only 7s B**** so the investor have the option to ma0e margin
transaction by investing 7s B**** of o%n and borro% the rest of money 7s ;****
from the bro0er#
!!/ Marg,n call
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S'88ES$I%S
A)
RE*%MME)A$I%S
S'88ES$I% A) RE*%MME)A$I%S
For the betterment of Islamabad stoc0 e1change %e recommended some suggestions
%hich are the follo%ing
I*REASE $1E 'MBER %& S$%*: E;*1A8ES
B)
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If %e compared the number of stoc0 e1changes %ith India, %here " stoc0 e1changes
are currently in operations %hich give an easy access to the investors of India#
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'o protect the investor and 0eep is interest the stoc0 e1change established a fund
%hich is called the investor protection fund (I/F# 'his is good step but it fund given
to this is very lo% so it %ould also reuired to increase#
I*REASE $1E SA6ARIES %& $1E EMP6%
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*%*6'SI%
After studying the stoc0 mar0et %e have come to the point the point that stoc0 mar0et play
very crucial and important role in the economy of a country# $o% days the economists of the
%orld %hen conducting the survey regarding the economic conditions of the country they use
the stoc0 mar0et as indicator#
'he financial statements of the current year of the Islamabad stoc0 e1change revealed that
the performance of the IS6 is going %ell and better than the previous years#teh IS6 !* inde1
sho% much fluctuations from "**C to "*!!H!"# 'he inde1 of the IS6 increase from !+! to
"+"" points# 'he total mar0et capitali4ation of the IS6 is also increased, but the numbers of
the listed companies on IS6 has slightly decree in "*!"# 'he management of the IS6 is highly
professional, efficient, cooperative, and hard %or0ing# 'he trading system of the IS6 is no%
fully electronic, due to %hich the chances of the fraud has been reduce, %hich is good sign of
improvement of the IS6 system#
7ecently a bill for the demutuali4ation of the /a0istani stoc0 e1changes has been passed from
the parliament of /a0istan# 'his system %ill be launch soon in the coming months# 'he
BC
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Islamabad Stoc0 61change is fully ready for the adoption of demutuali4ation system# 'his
system %ill change the o%nership system of the stoc0 e1change #through demutuali4ation of
stoc0 e1changes the o%nership %ill be transferred from the stoc0 bro0ers to investor, %hich
%ill increased the trust of the foreign as %ell as the local investors#
RE&ERE*ES