LAHORE STOCK EXCHANGE - PROFILE

Jan 13 - 19, 2003 

Lahore Stock Exchange (LSE) was incorporated in October, 1970 under the Securities and Exchange Ordinance, 1969 as a company limited by guarantee. It caters to the needs of entrepreneurs for raising of capital and provides investment opportunities to the investing public. The activities of the Exchange have increased in all areas since inception and it has become a key institution of the financial sector of Pakistan.

The Governing Board of LSE consists of 10 Directors, including the Chairman, out of which 4 are outside non-members directors appointed by Securities and Exchange Commission of Pakistan (SECP), from amongst securities market experts, lawyers, chartered accountants, investment bankers, etc. The Board has appointed a foreign qualified experienced and professional Managing Director, who has been delegated the authority to deal with all operational matters of the Exchange independently. This has ensured the protection of interests of various stakeholders i.e. members, investors, issuers and regulatory authorities. The management has also appointed a Chief Operating Officer at LSE to ensure effective control of the operations at various levels.

Quality Policy of the Exchange is to bring it upto the international operational, technical, regulatory and quality management standards and to gain and maintain the confidence of the investors as one of the best regional stock markets. We are fully committed to provide transparent, efficient, economic, well-equipped and investor-friendly environment for the promotion of capital market in Pakistan.

LSE is an active member of Federation of Euro-Asian Stock Exchanges (FEAS) and South Asian Federation of Exchanges (SAFE). LSE has also made direct investment in Pakistan Credit Rating Agency (Pvt) Ltd. (PACRA), Central Depository Company Ltd. (CDC), National Clearing Company of Pakistan Ltd. (NCCPL), and National Commodity Exchange Ltd. (NCEL), which play a central role in developing financial sector infrastructure of Pakistan.

There are 151 members of the Exchange, out of which 47 are Corporate Bodies including 6 listed companies, 2 wholly-owned subsidiaries of listed companies and 1 public sector commercial bank. Majority of the members is active. The institutional members are playing dynamic role in handling public funds for investment in stocks. The members of Exchange have branch offices in the most of the populous cities of the country. Membership applications are scrutinized strictly under the Rules and Regulations of the Exchange. A member is also required to get registration certificate from SECP before starting brokerage business.

LSE has taken effective risk and exposure management measures. A new Risk & Exposure Management (REM) Department has been established to focus and control the risk associated with members' trading. LSE implemented a fully automated in-house developed Trade Risk Filter (TRF) to efficiently monitor members' pre-trading exposures on real time basis. This has been a quantum leap for us in improving our risk management systems. LSE has implemented Regulations Governing Members' Exposure to ensure smooth operation of LSE Clearing House. Every active member is allowed to trade upto 25 times of its net capital balance. Active members are also required to join CDC and NCCPL.

LSE is the first fully automated Stock Exchange of Pakistan and has the most premier technology. LSE has done large investment in technology & automation to keep pace with globalization of securities trading. By the grace of Almighty Allah, LSE has been running screen-based computerized trading system very successfully since December 30, 1996. Working on policy of self-reliance in automation, our MIS department has developed an automated trading application called Ultra Trade. Ultra Trade is a highly scaleable and cost-effective solution for emerging stock exchanges. State of the art technology has been used for the best performance. Benchmark result shows that this system is capable to execute 100,000 trades per hour. Ultra also allows remote traders to trade through Internet. Remote trading connections being provided by the Exchange offer opportunity to the members to operate their trading terminals from anywhere through Internet. View only terminals (VOT) are also available within and outside the Building to view online market activities. The Clearing and Settlement System is also completely computerized and members have online access to their clearing data from their back offices. The software to link the Clearing, Settlement and Dissemination Systems with the screen-based trading system has been developed in-house. Ultra Trade System has already been provided to the Karachi Stock Exchange and Islamabad Stock Exchange on commercial basis. LSE will continue to innovate in order to provide investors and other market participants with more choice and convenience.

LSE has incorporated Code of Corporate Governance in the Listing Regulation of the Exchange, which provides regulatory framework for the management of listed companies in compliance with best practices.

Since automation, there has been considerable increase in trading activities at LSE. During the year 2001-02, a record turnover of 18,281.160 million shares with monetary value of Rs. 429 billion was witnessed. At present, 569 companies with paid-up capital of Rs. 280.587 billion and 16 Term Finance Certificates (TFCs) of companies with total issue size of Rs. 7.599 billion are listed at LSE. The aggregate market capitalization as on December 31, 2002 was Rs. 593.847 billion. LSE has also started trading in the Futures Contracts in approved securities.

LSE launched its new index from December 20, 2002, namely LSE-25 Index. The intention behind creating a new Index was to capture a significant amount of the trading volume in the market. This is the first in a series of new indices that will be launched by LSE.

We are confident that through various reforms that have been implemented will improve LSE as more vibrant and strong institution. LSE has plan to take further steps to keep up the pace of development in the coming years in the following lines:

* LSE Automated Trading System - Ultra Trade is continually being upgraded and more features are being introduced to take into account new technology, risk management techniques and regulatory requirements.
* To promote and sell Ultra Trade to other interested Stock Exchanges especially among developing markets.
* To upgrade In-house developed Back-Office System for brokers.
* Provision of more Internet trading connections to each member of the Exchange.
* To create a separate and larger section for debt instruments and stimulate development of an active secondary market.
* To further develop the futures contracts market and promote further liquidity.
* To develop innovative products for the market to make meaningful contribution to the growth of our economy through capital formation and its effective utilization.
* To take further regulatory steps in the interest of investors protection including quicker disposal of investor claims.

TOP 25 COMPANIES BY VOLUME DURING THE YEAR 2002

Sr. No.

Company Volume

1.

HUBCO

2,880,658,000

2.

PTC

2,690,941,000

3.

PSO

1,147,623,400

4.

Sui Northern

506,381,000

5.

FFC-Jordan

421,725,500

6.

NBP

389,568,000

7.

D.G. Khan Cement

312,743,500

8.

Dewan Salman Fibre

281,520,500

9.

MCB

280,603,500

10.

BOP

255,114,000

11.

Engro Chemical

210,741,900

12.

Nishat Mills

174,806,500

13.

ICI

170,848,900

14.

KESC

168,034,500

15.

Adamjee Insurance

151,250,000

16.

FFC

77,325,300

17.

Japan Power

65,811,000

18.

Pakistan PTA

50,796,500

19.

Chakwal Cement

49,166,000

20.

Worldcall Communications

42,626,500

21.

Lucky Cement

34,151,500

22.

Southern Electric

33,112,500

23.

Maple Leaf Cement

23,313,000

24.

Pioneer Cement

13,796,500

25.

ICP SEMF

10,035,500

 


 

TOP 25 COMPANIES BY MARKET CAPITALIZATION AS ON DECEMBER 31, 2002

Sr. No.

Company

Market Capitalization Rs.

1.

PTC

97,935,300,000

2.

HUBCO

46,401,891,440

3.

KESC

42,681,419,081

4.

PSO

36,122,027,760

5.

FFC

18,826,799,207

6.

Pakistan Oil Fields

13,404,268,800

7.

Unilever Pakistan

12,961,533,000

8.

Engro Chemical

12,819,159,307

9.

Sui Northern

12,279,992,131

10.

Sui Southern

12,215,372,824

11.

Shell Pakistan

12,150,299,700

12.

Pakistan PTA

10,675,157,940

13.

NBP

10,482,377,635

14.

Nestl'e Milkpak

9,890,167,613

15.

MCB

8,889,296,427

16.

FFC-Jordan

7,624,795,000

17.

ICI

7,495,324,200

18.

Dawood Hercules

6,437,145,600

19.

Pakistan Tobacco

6,080,748,251

20.

Ibrahim Fibres

5,790,955,457

21.

National Refinery

5,211,154,160

22.

Dewan Salman Fibre

5,026,266,788

23.

PIA (A)

4,323,456,625

24.

Packages

4,159,505,000

25.

Faysal Bank

3,865,861,000