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Opening An Account :
There is only one Account Opening Form Standerized Provided by CDC to Every Broker,
Get the Account opening Form, From the JISPL Office.
Fill the form as per requirment given in the form,
The Most Improtent Things to be filled in the Form are:
Note :
Signature on space = X = Where marked X
Photocopies of CNIC of A/c Holder, Joint Holder and Nominee
Detail of your Bank A/c for Dividends on Column "C"
Bank Verification on Column "F" (Mandatory)
Zakat Declaration for Zakat Exemption (Muslim Zakat Non-Payable)
Mother Name, Mobile Number and Email Address (Mandatory)
Two Signatures of the Witness.
Once The Account Opening Form is Given Back To Us you Account Will Be Active Within Two Days.
Account opening Charges will be charged.
Yearly Charges will be Applied as per they billed on period times.
Method Of Payments :
If you are to give as a payment to Purchase you required Securities you can pay:
CASH or CHEQUE.
Bank: Habib Bank Limited (HBL)
Account Title: Javed Iqbal Securities (Pvt) Ltd
Account Number: 08660006278001
If you want your balance amount, we will pay you by Payee's A/c only Cheque of your name. Above Rs. 24000
Introduction to Share Business :
What is a Share?
A share is a portion of the value of a company or mutual fund. When a company issues shares, it divides its value into equal units which are offered for sale to investors. For example, if a company is currently worth €500 million, and it has issued 100 million shares, each share is currently worth €5.
When you buy shares, you become a part owner of that company. The more shares in that company that you buy the larger portion of the company you own.
Shares are also referred to as equities, stocks or securities.
Trading Shares on Stock Exchanges :
Shares are bought and sold on stock exchanges. A stock exchange is a regulated marketplace for the trade of shares, bonds, funds and other financial securities. To be traded on an exchange, a share must be listed on that exchange. Each exchange has its own regulations and requirements that a company must meet before its shares can be listed. These requirements can include such conditions as a minimum annual income or a minimum number of shares outstanding.
Primary and Secondary Markets :
Stock exchanges have two different markets, the primary market and the secondary market.
The primary market is companies issuing shares to raise equity capital, normally through an Initial Public Offering (‘IPO’). In the primary market the investor buys shares directly from the company.
The secondary market is investors buying and selling shares at any time. This trade does not directly involve the company whose shares are being bought or sold.
Dual Listed Shares :
A share can be listed on more than one exchange. This is known as dual listing. If a share is listed on exchanges in different time zones, dual listing can increase the hours during which you can trade the stock. Dual listed stocks can sometimes provide more liquidity.
Liquidity :
The liquidity of a share is the relative ease with which it can be bought or sold, typically due to a high level of trading activity in that stock. The higher the liquidity of a share, the more easily you can convert your investment to cash. A share that is more difficult to sell would be described as illiquid.
Risks of Investing in Shares :
WARNING The following is a list of some of the important risk factors that prospective investors should consider prior to making a decision to invest in shares. The list is not intended to be comprehensive or exhaustive. Various other risks also apply, depending on the share acquired. You should ensure that you fully understand the risks associated with any investment prior to making a decision to invest. You should also consult Davy in the event that you require further information or have any queries in relation to same.
The Relationship Between Risk and Return :
Risk is an inherent part of investing. Generally, investors must take greater risks to achieve greater returns. However, taking on additional risk does not always lead to greater returns. Investors who take on additional risk must be comfortable with experiencing significant periods of underperformance in the expectation of achieving higher returns over the longer term. Those who do not bear risk very well have a relatively smaller chance of making high earnings than do those with a higher tolerance for risk; similarly they have a smaller chance of making significant losses. It is crucial to understand that there is an inevitable trade off between investment performance and risk. Higher returns are associated with higher risks of price fluctuations.
It is important to establish your attitude to risk before you begin investing. Is the security of your capital the overriding influence in your investment decisions or are you willing to tolerate the ups and downs of the market in the expectation of higher returns?
Although not always the case, generally speaking, the level of return on your investments will reflect the underlying risk. If you are only willing to accept low or zero levels of uncertainty, your investment returns are also likely to be low. However, an investment that seems very attractive in terms of its potential return may not be the right choice if it carries an unacceptably high risk. High risk investments generally require that the investor has the ability to hold it for
the longer term (5-10 years), in order to allow shorter term performance issues time to resolve themselves. Importantly, investors should remember however that accepting high levels of risk does not always result in high returns.
Not all investment decisions will turn out as expected but diversification can be a key tool in managing risk. By acquiring a portfolio of varied investments across a range of asset classes (shares, bonds, cash, etc.), geographies and sectors, investors can minimise the effects which poorly performing investments can have on their overall portfolio. This diversification theory applies within asset classes as much as at portfolio level.
There are specific risks which investors should be aware of when investing in certain asset classes. The following section deals with some of the risks which apply when investing in shares.
The risk of capital loss :
When a company is performing poorly or when the market perception of the company is negative, the share price may fall below the price which you originally paid for the share or even to zero. If a company goes out of business, its shares will become untradeable and it is likely to be delisted. Where a liquidator is appointed, shareholders are last in the list of other creditors (for example, banks, suppliers, etc.) to receive any funds that may be realised.
Volatility risk :
Share prices can be very volatile and investors should be aware that their shares may fluctuate significantly in price in short periods. This can apply to individual stocks, sectors or to the market itself.
Market risk :
This is the chance that the entire market will decline, thus affecting the prices and values of securities. Market risk, in turn, is influenced by outside factors such as interest rate changes.
Sector specific risk :
This is the risk that a particular sector experiences malaise, for example the airlines industry on news of terrorist attacks. Such periods of weakness can however provide buying opportunities, but existing investors must decide whether they are prepared to weather the storm or whether they should sell their shares in anticipation of further declines.
Stock specific risk :
Similar to sector specific risk, this is the risk that a particular investment will experience share price declines due to negative news flow or poor sentiment towards the company. This would usually follow a weak trading statement or perhaps a change in management which is not well perceived by the market.
Timing risk :
This is the risk that you buy or sell a share at the wrong time. Not all sectors of the market follow the same price cycles. Understanding business cycles and how different companies perform during different phases of the business cycle can help to manage the effects of timing risk.
GETTING START :
The fresher the fish the better the price at the market. The "stock market" is just that- a huge "market" where stocks are traded by many different vendors. Similar to the way other things are traded- like fish or vegetables at the old-world market, or cows at the cattle auctions- stocks are traded "at auction". Prices are determined by supply and demand- by sellers and buyers willingness to buy or sell at a certain price. As demand goes up, the price goes up, and so on.
Imagine, over 100 years ago, brokers literally shouting "I have 100 shares of Pacific Railroad for sale, how much will you offer me?" If a broker had an order to buy some stock he would shout "Someone sell me 100 shares of Pacific Railroad! Who has the best price?" You've probably seen some of that happening- in more modern times- in film clips of the Chicago Board of Trade where wheat, corn and pork bellies are bought and sold. Market trading is more organized now. Computers do the shouting.
Brokers arrange for the actual trades (isn't "broker" a funny name for someone that handles your money). A broker is someone who who sells stocks for a dealer. Charles Schwab is a dealer. The dealer holds inventories of stocks and sells them through the sales guy. The sales guy is the broker or the specialist. If a sell order comes across the computer at an attractive price, the dealer buys (through his agent, the specialist) , and adds this stock to his inventory. The brokers, and specialists, using computers, bring the dealers and investors together.
What makes the price of a stock change?
Companies are expected to earn profit. If profits increase, the stock price will likely increase. Even if investors think the earnings will increase, the stock price may go up. If good news comes out on a company, the price, and demand for the stock may go up. With bad news, the price and demand may go down. The price of a stock is even more dramatically affected when supply is very high or very low. It is not so uncommon for certain unscrupulous individuals to "create" news or other financial information, for the purpose of duping unsavy investors into creating a demand situation, into which, the unscrupulous-one "sells into" and makes an unfair profit. Investors beware.
There are several different prices :
Opening Price is the first price paid after trading starts, usually when the stock exchange "opens its trading doors", usually in the morning. Sometimes, opening price is higher or lower than the closing price of the previous day (orders are placed overnight, and after stacking up, affect the demand- and, thus, the opening price.
Closing Price is opposite- its the price of a stock when the market closes- the price "at the close".
Ask price is the price you will pay for a stock (and is slightly more than the trading price because it includes a dealer "commission").
Bid price is what the broker, or agent, will buy your stock for (and is slightly less than the trading price because it includes a dealer "commission").
Spread is the difference between the bid price and the ask price.
If many buy orders come through the specialist, the price for the stock will be increased. If many sell orders come across the desk, the price will go down. Supply and demand drives stock prices. Lots of orders reduces the spread- thinly traded stocks have a higher spread.
Stock Exchanges in Pakistan :
INTRODUCTION TO THE KSE MARKET
The Karachi Stock Exchange (KSE) was established on 18th September, 1947. It was later converted and registered as a Company Limited by Guarantee on 10th March, 1949. Initially, 90 members were enrolled, however, only half a dozen of them were active as brokers. Similarly only 5 companies were listed with a paid up capital of Rs. 37 million.
Now KSE has emerged as the key institution of the capital market of Pakistan with:-
Listed companies 724, securities listed on the exchange 752: ordinary share 724, Preference shares 5 and debt securities (TFC's) 23
Listed capital US$ 4,646 million
Market capitalization US$ 7,746 million
Average daily turnover 142 million shares with average daily trade value US$ 78 million
Membership strength at 200
Corporate Members are 92 out of which 9 are public listed companies
Active Members are 133
Fully automated trading system with T+3 settlement cycle
Deliveries through central depository company
National Clearing and Settlement System in place
Stock Exchange Road, Karachi
Ph:92-21-2425502, 2425504
Fax:92-21-2410825
INTRODUCTION TO THE LSE MARKET
Lahore Stock Exchange (Guarantee) Limited came into existence in October 1970, under the Securities and Exchange Ordinance, 1969, of the Government of Pakistan in response to the needs of the Provincial metropolis of the Punjab. Only 83 members had its memberships and it was housed in a rented building in the crowded area of Bank Square in exotic city of Lahore. The number of members has increased from 83 to 150 over a period of 25 years.
The past seven years have seen Lahore Stock Exchange come to its own. Business has been steadily on the increase. A modern Management Information System, (MIS) has been firmly in place. Clearing House activities are fully computerized, computer ordering has been implemented.
LSE has set up a credit rating company named "Pakistan Credit Rating Agency (Pvt) Limited", (PACRA), in a joint venture with International Finance Corporation (IFC), and IBCA Limited of London.
Khayaban-e-Iqbal, Lahore
Ph:92-42-6368000, 6368522
Fax:92-42-6363848
INTRODUCTION TO THE ISE MARKET
The Islamabad Stock Exchange (ISE) was incorporated as a guarantee limited Company on 25th October, 1989 in Islamabad Capital territory of Pakistan 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. The purpose for establishment of the stock exchange in Islamabad was to cater to the needs of less developed areas of the northern part of Pakistan.
At present there are 103 Members out of which 29 are corporate bodies including commercial and investment banks, DFIs and brokerage houses. The other 74 Members are individual persons.
Since the inception of automated trading system which is called ISECTS the trade volume is multiplying day by day and the average daily turnover has now crossed the figure of 7.5 million shares. The automated system which was indigenously developed replaced the outcry system in 1997. Now all the listed securities are traded through the ISECTS. The system of physical handling of shares and securities is being phased out and majority of the scrips are settled through Central Depository Company of Pakistan Limited.
At the moment there are 285 companies/securities listed on the Exchange with an aggregate capital of Rs. 155,352.618 million. The market capitalization was Rs. 209,360.670 million (US $ 4,551.132 million) as on 10-09-98
Fazal-ul-Haq Road, Blue Area, Islamabad
Ph:92-51-823330, 275045
Fax:92-51-275045
www.ise.com.pk
Brief History :
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 21st, 2017 there are 578 companies listed in PSX and the total market capitalization is Rs. 9,725.405 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 21st, 2017 there are total 35 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.
For a complete list of sectors, click here
For a complete list of listed companies, click here
Market Indexes :
Detailed information about these indexes can be obtained from PSX's web site http://www.psx.com.pk
KSE 100 Index :
The KSE-100 Index was introduced in November 1991 with base value of 1,000 points. The Index comprises of 100 companies selected on the basis of sector representation and highest free-float capitalization, which captures over 80% of the total free-float capitalization of the companies listed on the Exchange. 35 companies are selected i.e. one company from each sector on the basis of the largest free-float capitalization and the remaining 65 companies are selected on the basis of largest free-float capitalization in descending order. This is a total return index i.e. dividend, bonus and rights are adjusted. It is revised after every six months for inclusion or exclusion of companies on the basis of above mentioned criteria.
Free Float :
Free-Float is the proportion of total paid-up shares issued by a company that are readily available for trading at a Stock Exchange. It implies that the shares held by controlling directors, sponsors, promoters, government and other locked-in shares which are not available for trading in the normal course are excluded.
During 2012, the governing board of directors of the Pakistan Stock Exchange (formarly: Karachi Stock Exchange) decided to implement the KSE-100 Index on the basis of free-float market capitalization instead of total market capitalization. The Rules for composition and recomposition of the Index based on free-float methodology have remained un-changed other than selection of companies on the basis of free-float market capitalization as against total market capitalization.
KSE ALL Index :
In 1995, the need was felt for an all share index to reconfirm the KSE-100 and also to provide the basis of index trading in future. By August 29, 1995 the KSE-All Share Index was constructed which became operative on September 18, 1995.
KSE-All Index is calculated using total market capitalization method.
KSE 30 Index :
In June 2005, another benchmark index named KSE-30 was introduced with a base value of 10,000 index points to provide investors with a sense of how large companies' scrips of the Pakistan’s equity market are performing over a period of time. Thus, the KSE-30 Index is designed in such a way that it becomes comparable over a period of time similar to other indicators that track various sectors of country’s economic activity such as the gross national product, consumer price index etc.
KSE-30 Index is calculated using the free-float capitalization methodology.
KMI 30 Index :
Introduced in Spetember 2008, the objective of KSE-Meezan Index (KMI) is to serve as a gauge for measuring the performance of Shariah compliant equity investments. Besides tracking performance of Shariah compliant equities, its construction will increase investor trust and enhance their participation.
KSE-Meezan Index is also calculated using the “Free-Float Capitalization”.
For a list of current Shariah compliant companies and their selection criteria please visit Al-Meezan Investment Management Limited
ALL SHARES ISLAMIC Index:
Introduced on November 18, 2015 as a joint effort by the management of Pakistan Stock Exchange (PSX) and Meezan Islamic Bank Limited.
The principal objective of the All Shares Islamic Index is to gauge the performance of the Shariah compliant segment of the equity market. Accordingly, it is important that all those shares which meet the Shariah screening criteria should be included in the All Shares Islamic Index in order to ensure completeness of the index and adherence to the core objective of the proposed All Shares Islamic Index.
The companies included in this index are selected on the basis of a six factors selection criteria. First criteria is that the core business of the company must be permissable in Islamic Shariah and also on ethical grounds. Other five factors determine the financial compliance of the companies. After selection, these companies pass through another six stage filter to exclude defaulter, non-operational companies along with all Mutual Fund companies.
Base value for this index has been set at 15,000 points. Review and Re-composition will be carried out bi-annually.
EQUITY TRADING :
In finance, equity trading is the buying and selling of company stock Shares. Shares in large publicly trading companies are bought and sold through one of the major stock exchanges, such as karachi stock exchange, lahore stock exchange or islamabad stock exchange which serve as managed auctions for stock trades. Stock shares in smaller public companies are bought and sold in over the counters (OTC) markets.
Equity trading can be performed by the owner of the shares, or by an agents authorized to buy and sell on behalf of the share's owner. proprietary tradungis buying and selling for the trader's own profit or loss. In this case, the principal is the owner of the shares. Agency trading is buying and selling by an agent, usually a stockbroker, on behalf of a client. Agents are paid a commission for performing the trade. Major stock exchanges have market makers who help limit price variation (volatility) by buying and selling a particular company's shares on their own behalf and also on behalf of other clients.
Over the past 15 years with the popularity of the internet and discount brokarage firms, it has become increasingly luring for the average investor to partake in their own financial planning and direction of their future. Although trading can be incredibly stressful and dangerous financially, many people have made it their profession in place of a 9 to 5 job. Individuals that pursue this non-mainstream career usually will have a knack for technical analysis, money management, tape reading and trader's psychology as well as enjoy working in a fast paced competitive environment
WHAT IS CDC :
Incorporated as a public limited (Unlisted) company in 1993, Central Depository Company of Pakistan Limited (CDC) is the only depository in Pakistan. The Company started operations in September 1997. CDC is the sole entity handling the electronic (paperless) settlement of transactions carried out at all three stock exchanges of the country. Through efficient functioning of CDC, approximately 99% of the market settlement is in book entry form.
CDC was primarily established to operate the Central Depository System (CDS) for equity, debt and other financial instruments that are traded in the Pakistani Capital Market. However, with the passage of time and development of Pakistan’s Capital Market, it now also provides services that are beyond the traditional depository services. CDS is an electronic book entry system used to record and maintain securities and their transfer’s registration. The system changes the ownership of securities without any physical movement or endorsement of certificates and execution of transfer instruments.
CDC provides depository services to a wide range of Capital Market participants which includes Brokers, Asset Management Companies, Banks (including Custodian Banks) and general retail investors. It also serves to link up the Issuers and Registrars of securities and the market for the purpose of executing corporate actions like disbursement of corporate benefits and carrying out mergers and splits.
The aim of CDC is to operate as a central securities depository on behalf of the financial services industry so as to contribute to the country's ability to support an effective capital market system which will attract institutional and retail level investors from Pakistan and abroad. CDC is regulated by the Securities and Exchange Commission of Pakistan (SECP). CDC has branches in Karachi, Lahore and Islamabad.
Taking another step towards capital market development, CDC has diversified its operations in the following services: Launched in 1999, Investor Account Services (IAS) allows retail investors to open and maintain securities’ accounts directly with CDC.
Trustee and Custodial Services (T&C) were introduced in 2002 and enlists Open-end and Closed end Mutual Funds and Voluntary Pension Schemes.
Launched in 2008, Share Registrar Services (SRS) provides issuing companies state-of-the-art facilities of registrar and transfer agent services, including registration and verification of shares and records and customer dealing on behalf of issuer companies.