This year serves as an important milestone in the history of
Lahore Stock Exchange, for completing the 3rd decade of its existence. Initially
formed by a group of 10 founding members, it was housed at a rented premises at
Bank Square, Lahore. It completed its gestation period calmly and, in the
absence of independent trading floor, it was seen, then, to be more active, in
the trading of Bonus Vouchers.
In 1992, it moved to its present 9 storeyed building, started
independent trading of shares, witnessed volume increases and, started
demonstrating institutional vision, which had salutary effects, on the
development of capital markets, in Pakistan.
By and large, the decade of 90's witnessed institutional
deterioration and poor governance in the country through non-transparent
policies; thereby creating horizontal and vertical imbalances in our economy.
Contrary to this situation, stock exchanges in general and LSE in particular,
have convered a long distance. The achievements of LSE can be highlighted as
under:
(a) Role in infra-structural development
LSE played a participative role in the establishment of the
following institutions, which were vital for the development of the capital
market:
* Acted as a sponsoring shareholder in the establishment of
1st Credit rating agency, PACRA together with IFC & IBCA of London.
* Also, acted as a sponsoring shareholder for the establishment of Central
Depository Company (CDC); thereby participating in the process of
dematerialization of physical deliveries.
* Also participating in the establishment of proposed National Clearing Company.
(b) Prominent milestones
* It was the first Exchange to start the computerized trading
since December 1996.
* It was also the first to start the carry-over trades through its trading
engine.
* Odd lot trading was, also, arranged first by LSE through the system.
* It was the first Exchange of the country to have ISO - 9002 Certification from
M/s. Moody's Int., in the year, 2000.
* In realization of investors' importance and the transparent dispute resolution
system, the Member-Client Arbitration Committee has been formed, its procedure
laid down and having non-member directors, especially a retired judge, for
adjudication, is a credible development.
(c) Pioneering Role in Computerized Trading
I.T. is a "buzz" word today but its importance was
realized by the management in 1994. LSE was the pioneer in conceiving the idea
of computerized trading, selected M/s. EFA Int., a Canadian Software vendor,
financed the whole project through mobilization of its own resources and on Dec.
1996, it created history, for being the first Exchange, to have fully automated
trading system. The skilful management of this cultural change, not only
enhanced the institutional image; but also produced positive results for all the
stakeholders. It brought comfort feeling to investors through transparency, and
efficiency, resulting in discovery of better prices for their trades. There was
a quantum jump in the trading volumes and was instrumental in creating more
depth in the market.
MIS Department at LSE, has really proved to be a jewel in the
crown. Initially, it had developed its won settlement system, followed by a
system for exposure monitoring on real time basis. Being conscious of the
capacity limitations, especially in case of volatility and sudden volume
increases; it had embarked on a challenging project of developing its own
trading system. By the Grace of Almighty Allah, it has successfully developed
its own, state of the art, hardware based, "ULTRA Trade system" with
tremendously enhanced capacity, which is operational since the year 2000. The
benchmarking of this system at, Unisys Lab, in USA, is already complete.
The said technological achievement is bound to open new
vistas for the Exchange. The system has already been sold to the Karachi Stock
Exchange and LSE's participation in the forthcoming ITCN exhibition should be a
road show, to present it globally, at a very competitive price, to small and
medium sized exchanges. LSE, being member of the two regional forums, i.e.
Federation of Euro-Asian Stock Exchanges (FEAS) and South Asian Federation of
Exchanges (SAFE), is ideally placed to market this system to their member
countries.
(d) Administrative re-structuring
To ensure capital market reforms, LSE has been able to
finalize the following re-structuring work:-
* Appointment of full time paid M.D./CEO with complete
operational independence in 1998.
* Appointment of M.D./CEO on the Governing Board of Directors alongwith 7
non-member directors as SECP nominees, since 1998.
The induction of the elite professionals, as non-member
directors has not only magnified the stature of the Board; but, also, has
significantly enhanced the multi-dimensional inputs, resulting in the
professional appraisal of the issues, at hand.
(e) Role in the Promotion of Academic/Research Activity
* LSE is conscious of playing institutional role through
promoting awareness, disseminating knowledge, and providing useful feedback on
matters of national importance.
* In patronizing merit and excellence, it has been sponsoring gold medal for the
MBA position holder of Institute of Business Administration, University of the
Punjab.
* The Exchange has started giving scholarships to needy students, under set
criteria.
* It has widely opened its doors to students for doing internships and offered
itself as a model for conducting any academic exercise and for doing any
analytical/research work.
|
(f) Market Size |
|
As on 28.2.2001 |
|
*
No. of listed companies |
614 |
|
*
No. of TFC's & Bonds |
9 |
|
*Paid-up capital of listed cos. |
Rs. 227.725 billion |
|
*
Market capitalization |
Rs. 398.08 billion |
|
*
Average daily turnover |
34, 080,674 shares |
|
*
Average value trade |
Rs. 1,413,550,362 |
(g) Future strategy
* LSE is preparing to move-over, soon, to T+3 Continuous Net.
Settlement system in co-ordination with other Exchanges of the Country.
* It does realize the importance of E-Trade. Developing linkages and providing
remote access, has been recognized, as a priority. MIS department is more than
half way through in developing the software, for Internet trading.
* The management is inclined to bring amendments in the Articles; thereby
strengthening the office of the M.D./CEO and increasing the strength and role of
the non-member directors and election of the Chairman, Vice Chairman indirectly.
* Risk pre-emption and its management is, undoubtedly, the top most priority.
Surveillance Department at LSE, is planned to be established, to ensure smooth
functioning and , to arrest unfair trade practices.
* The management is conscious that technological development is capable to make
the exchanges geographically neutral. The massive investments in
hardware/software by the three stock exchanges in the face of redundant capacity
alongwith duplication of costs, for all the participants, is likely to bring
compulsive change in the mind set, with merger being the only viable option. The
Board has already formed a committee to prepare a report, from this angle.
* The management is cognizant of the fact that de-mutualisation of the Exchange,
is the ultimate future. The Board has, also, made a special committee to do the
ground work, towards this end.
* The exchange intends to capitalize on its achievements through generation of
resources, for frothier developmental works, by marketing its settlement system,
exposure monitoring system and ULTRA Trade System.
* The Exchange as a member of SAFE & FEAS, plans to benefit from its
technological lead and is keen to participate in cross-border listing, once the
Capital Account Convertibility, is allowed in the member countries.
