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LSE PLAYING A DOMINANT ROLE TOWARDS GROWTH OF CAPITAL MARKET IN PAKISTAN.

Byline: KANWAL SALEEM

Lahore Stock Exchange (LSE) is a fully electronic and completely automated stock exchange of Pakistan. As of today, the LSE is the only domestic exchange to have more than one trading floors and is also the only exchange in the region to have established a unified order book with another domestic stock exchange in the country.

Activities at LSE have increased significantly in all operational areas since its inception. A number of significant initiatives have been taken to improve the regulatory regime and the trading environment for the benefit of institutional investors as well as listed companies, a senior official in the LSE told PAGE.

According to him, the LSE has successfully met various challenges and has now emerged, fully geared and positioned to aggressively compete with its fellow exchanges, contributing towards the growth of capital markets in Pakistan. "We recognize that LSE is an organization with obligations to a number of different stakeholders including members, investors, listed companies, regulator, human resource, suppliers, and the general public. We are committed to provide the efficient platform for the brokerage business, quality services backed by sincere service support to the members. We are committed to maintaining the highest standards in all aspects of our relationships with our members."

With the launch of a new algorithmic trading system in the Lahore Stock Exchange, brokers and traders are able to enhance liquidity and adopt new trading strategies as they aim to bolster trading activity at the exchange.

According to Managing Director LSE, Mr. Aftab Ahmed, the new system will allow the LSE to compete on a regional level against the Karachi Stock Exchange and Islamabad Stock Exchange. Apart from efficiency, traders who are looking for arbitrage opportunities can benefit from the new system. The new system will take advantage of the price difference between the two exchanges based on the spread defined by the broker himself.

It may be noted that the LSE was Pakistan's first trading exchange to launch an automated trading system in 1996. This was followed by online trading systems through the worldwide web for brokers and retail investors. The LSE has been a pioneer of e-trading systems in the country and developed its own property technology, the venue outlined details about the platform on its website, explaining: "ULTRA TRADE an indigenously developed, sophisticated Automated Trading System being used in the stock exchange markets across the globe. It offers its customers with a totally integrated approach across the entire investment life cycle by integrating market data for better price discovery through automated trade execution, using efficient matching algorithms."

ONLINE TRAINING PROGRAM

In 2014, Mr. Aftab Ahmed says the LSE launched an online training competition for participants to learn and understand the stock market. The Lahore Stock Exchange is proactive in promoting financial literacy in the South Asian nation. It is the only exchange in Pakistan which has a regular Financial Literacy Program, he added. He further said the LSE has also joined hands with the South Asian Federation of Exchanges (SAFE) to provide basic financial knowledge to students of all ages across the nation. In sequel to the FLI program, LSE has successfully introduced "Virtual Investment Competition" to lead the program to an advanced level.

Highlighting the financial position of the LSE for the half year ended December 31, 2014, the sources in the LSE said the exchange earned total revenue of Rs108.944 million for the period under review as compared to Rs127.682 million of the previous period thereby recorded decrease by 15 per cent. Major contributories to the revenue side included income from fees (Annual Listing, Additional Listing and Trading Fee) which amounted to Rs37.09 million and this head showed decrease of Rs27.08 million or 43 per cent from corresponding period. Income from interest on bank deposits and fund management fee amounted to Rs35.056 million. Operating, administrative expenses clocked at Rs72.219 million including other charges amounting to Rs4.37 million. The company reported profit before taxation of Rs67.762 million for the period under review, which is higher by Rs0.927 million or 1 per cent as compared with corresponding period.

Earnings per Share -- (Basic and Diluted) for the period under review ending 31 December, 2014 was recorded at Rs0.39, which is higher by Rs0.06 or 19 per cent from corresponding period's EPS.

The Board of Directors of LSE in the meeting held on March 17, 2015 has decided to pay Interim Cash Dividend to the shareholders of LSE @ Rs0.25 per share i.e. @ 2.5% for the second Quarter ended on December 31, 2014. The dates of Book Closure for the purpose of determination of entitlement of the shareholders shall be announced separately.

The consistent improvement in economic indicators kept the momentum going in the capital markets resultantly Index reached an all-time high level. All these positive developments prompted the State Bank of Pakistan to reduce the discount rate by 150 bps to 8.5% p.a.

During the period from July to December, 2014, LSE-25 increased from 5,569.33 to 6,154.14 i.e. up by 10.5%. During the same period, 155.198 million shares were traded. The listed capital of the companies increased from Rs1.108 trillion to Rs1.110 trillion while the market capitalization increased from Rs6.794 trillion to Rs7.030 trillion during the period under review.

During this half year, LSE listed 6 open end funds while the listing of 3 companies, 1 TFC, 1 PTC and 2 open end funds were in the pipeline. During the same period 1 company was delisted due to buy-back of shares and 2 TFCs were fully redeemed and delisted.
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Publication:Pakistan & Gulf Economist
Date:Aug 2, 2015
Words:947
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