Pakistan Stock Exchange Limited (PSX):Formerly: Karachi Stock Exchange Limited (KSE).
Pakistan Stock Exchange Limited (PSX) (formerly: Karachi Stock Exchange (Guarantee) Limited (KSE) was established on September 18, 1947. It was incorporated on March 10, 1949. Only five companies were initially listed with a total paid-up capital of 37 million rupees. The first index introduced in KSE was based on fifty companies and was called KSE 50 index. Trading used to be carried out on open out-cry system. Computerized trading system called Karachi Automated Trading System (KATS) was introduced in 2002 with a capacity of 1.0 million trades per day and the ability to provide connectivity to an unlimited number of users.
In October 1970, under the Securities and Exchange Ordinance of 1969 by the Government of Pakistan, a second stock exchange was established in Lahore in response to the needs of the provincial metropolis of the province of Punjab. It initially had 83 members and was housed in a rented building in the crowded Bank Square area of Lahore. The LSE was the first stock exchange in Pakistan to use the internet.
Yet another stock exchange known as Islamabad Stock Exchange was established in Islamabad, the capital city of Pakistan on October 25, 1989 with the main object of setting up of a trading and settlement infrastructure, information system, skilled resources, accessibility and a fair and orderly market place that ranks with the best in the world and to cater to the needs of less developed areas of the northern part of Pakistan. It was licensed as a stock exchange on January 7, 1992.
All these three exchanges had separate management, trading interfaces, indexes, listing criteria etc and thus had no mutual links to each other. All three exchanges were previously operating as a non-profit organizations with mutualized structure wherein there respective members had trading as well as ownership rights. This structure inherently created conflict of interest and perceived to jeopardize the investors' interest. Therefore, the Stock Exchanges (Corporatization, Demutualization & Integration) Act, 2012 (known as "Demutualization Act") was promulgated by the Government. As a result these three exchanges were merged together to form a new combined exchange called Pakistan Stock Exchange Limited (PSX) which started its operations on January 11, 2016 under this new title.
As provided under the aforesaid Demutualization Act, now Members have ceased to be Members of PSX and they have been issued Trading Right Entitlement Certificates ("TRECs") and PSX's ownership shares, thus separating trading rights from ownership rights. Whereas TRECs represent trading rights, PSX shares represent ownership. Now, TREC holders need not be a shareholder of PSX nor a PSX shareholder is required to be TREC holder of PSX.
As envisaged under the provisions of the Demutualization Act, regulatory functions have been segregated from commercial functions of PSX, so that regulatory functions are not compromised for achievement of commercial objective of generating revenue. Moreover, under the provisions of the said Act, after demutualization, persons representing TREC holders on the PSX Board shall not be in majority and the Act also envisages divestment of shares of TREC holders held in their blocked accounts to strategic investors and general public/financial institutions within a certain time limit.
Karachi branch of Pakistan Stock Exchange is located on Stock Exchange Road, in the heart of business district of Karachi. The premises is known as Stock Exchange Building.
Listing in PSX:
As on February 28th, 2024 there are 544 companies listed in PSX and the total market capitalization is Rs. 6,226.621 billions. The listing is done on the basis of strict rules and regulations laid out by Securities Exchange Commission of Pakistan (SECP) & the management of Pakistan Stock Exchange Limited. All the listed companies are categorized in various main business sectors. As on February 28th, 2024 there are total 37 sectors listed on Pakistan Stock Exchange which contribute towards the market capitalization and all the listed companies (excluding their future contracts) are divided among these. Rest of the noncontributory sectors are allocated for indexes, futures, bonds etc.
Detailed information about these indexes can be obtained from PSX's web site http://www.psx.com.pk