Over view of market 1. Market:A public place where buyers and sellers make transactions, directly or via intermediaries.

Or A market is a public place where provision and object are exposed for sale. 2. Types of financial Market:There are two types of Market as following:

1. Money Market 2. Capital Market Money Market:In finance, the money market is the global financial market for short-term borrowing and lending. It provides short-term liquidity funding for the global financial system. The money market is where short-term obligations such as Treasury bills, commercial paper and bankers 'acceptances are bought and sold.

Capital Market:It is defined as a market in which money is provided for periods longer than a year. As the raising of short-term funds takes place on other markets (e.g., the money market). The capital market includes the stock market (equity securities) and the bond market (debt)

Capital market
Stock Market Introduction:
(stock exchange, securities exchange or bourse is a corporation or mutual organization which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities.) Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include: shares issued by companies, trusts and other pooled investment products and bonds. To b e a b l e t o t r a d e a s e c u r i t y o n a c e r t a i n s t o c k e x c h a n g e , i t h a s t o b e l i s t e d t h e r e . Usually there is a central location at least for recordkeeping, but trade is less and less l i n k e d t o s u c h a p h y s i c a l p l a c e , a s m o d e r n m a r k e t s a r e electronic, w h i c h gives them advantages of speed and cost of transactions. Trade on an exchange is by members only. The initial offering of stocks and bonds to investors is by definition one in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and d e m a n d i n s t o c k m a r k e t s i s d r i v e n b y v a r i o u s f a c t o r s w h i c h , a s i n a l l free markets, affect the price of stocks (see stock valuation).There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said to be off exchange or over-

the-counter.

This

is

the

u s u a l w a y t h a t bonds are traded. Increasingly, stock exchanges are part of a global market for securities

History
In 11th century France the courtiers de change was concerned with managing and regulating the debts of agricultural communities on behalf of the banks. As these men also traded in debts, they could be called the first brokers. Some stories suggest that the origins of the term "bourse" come from the Latin bursa meaning a bag because, in 13th century Bruges, the sign of a purse (or perhaps three purses), hung on the front of the house where merchants met. House Ter Beurze in Bruges, Belgium. However, it is more likely that in the late 13th century commodity traders in Bruges g a t h e r e d i n s i d e t h e h o u s e o f a m a n c a l l e d V a n der Burse, and in 1309 t h e y institutionalized this until now informal

meeting and became the "Bruges Bourse". The idea spread quickly around Flanders and neighboring counties and "Bourses "soon opened in Ghent and Amsterdam. I n t h e m i d d l e o f t h e 1 3 t h c e n t u r y , Venetian b a n k e r s b e g a n t o t r a d e i n g o v e r n m e n t securities. In 1351, the Venetian Government outlawed spreading rumors intended to lower the price of government funds. There were people in Pisa, Verona, Genoa and Florence who also began trading in government securities during the 14th century. This was only possible because these were independent city states ruled by a council of influential citizens, not by a duke. The Dutch later started joint stock companies, which

l e t shareholders invest i n business ventures and get a share of their profitsor losses. In 1602, the Dutch India issued the first shares on the Exchange. It was the first company to issue stocks and bonds. I n 1 6 8 8 , t h e t r a d i n g o f s t o c k s b e g a n o n a stock exchange in London.

The role of stock exchanges

Raising capital for businesses

Mobilizing savings for investment Facilitating company growth

Redistribution of wealth

 Corporate governance

Creating investment opportunities for small investors Government capital-raising for development projects

Barometer of the economy

Stock Exchange of Pakistan

Karachi stock exchange (KSE) Lahore stock exchange (LSE) Islamabad stock exchange (ISE

Karachi Stock Exchange

The Karachi Stock Exchange or KSE is the first stock exchange located in Karachi, Sindh, Pakistan. Founded in 1947; it is Pakistan's largest and oldest stock exchange, with many Pakistani as well as overseas listings. Its current premises are situated on Stock Exchange Road, in the heart of Karachi's Business District. Later on two more stock exchanges were formed in Lahore (1971) and Islamabad (1992) to facilitate the investment in securities. The investor's get opportunities of international investment due to contract of Pakistans stock exchanges with other countries. The stock exchange not only informs the investors about international business trends but also plays important role in strengthening the economy of the country.

History of KSE:The KSE is the first stock exchange located in Karachi, Sindh, Pakistan Founded in 1947;it is Pakistan's largest and oldest stock exchange, with many Pakistani as well as overseas listings. Its current premises are situated on Stock Exchange Road, in the heart of Karachi's Business District.

Trading Time:The exchange has Pre-market sessions from 09:15am to 09:30am. Normal trading sessions from 09:30am to 03:30pm It is the second oldest stock exchange in South Asia

KSE Stock indices:There are two big indices used in Karachi Stock Exchange.

KSE 100 Index KSE 30 Index

KSE 100 Index:

BRIEF ABOUT 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

. OBJECTIVE
The primary objective of the KSE100 index is to have a benchmark by which the stock Price performance can be compared to over a period of time. In particular, the KSE 100 is designed to provide investors with a sense of how the Pakistan equity market is Performing. Thus, the KSE100 is similar to other indicators that track various sectors of the Pakistan economic activity such as the gross national product, consumer price Index, etc. and highest Free-Float Capitalization, which captures around 80% of the total Free Float Capitalization of the companies listed on the Exchange. Out of the following 33 Sectors, 32 companies are selected i.e. one company from each sector (exclude Open-End Mutual Fund Sector) on the basis of the largest Free-Float Capitalization and the remaining 66 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.

Free Float Methodology

Free-Float means proportion of total shares issued by a company that are readily available for trading at the Stock Exchange. It generally excludes the shares held by controlling directors / sponsors / promoters, government and other locked-in shares not available for trading in the normal course.

Objective and Description:

Free-Float calculation can be used to construct stock indices for better marke representation than those constructed on the basis of total Free Float market capitalization of companies It gives weight for constituent companies as per their actual liquidity in the market and is not unduly influenced by tightly held large-cap companies. Free-Float can be used by the Exchange for regulatory purposes such as risk management and market surveillance.

2) Lahore Stock Exchange

Lahore Sto ck Excha nge (Guarantee) Limited is Pakista n's seco nd largest s t o c k exchange after the Karachi Stock Exchange. It is located Lahore, Pakistan. Lahore Stock Exchange was established in October 1970 and is the second largest stock exchange in the country with a market share of around 12-16% in terms of daily traded volumes. LSE has 519 companies, spanning 37 sectors of the economy, that are listed on the Exchange with total listed capital of Rs. 555.67 billion having market

c a p i t a l i z a t i o n o f a r o u n d R s . 3 . 6 4 t r i l li o n . L S E h a s 1 5 2 m e m b e r s o f w h o m 8 1 a r e corporate and 54 are individual members. A c t i v i t i e s o f Lahore Stock Exchange (LSE) h a v e i n c r e a s e d s i g n i f i c a n t l y i n a l l operational areas since its inception. Over the years, LSE has successfully met various challenges and has now emerged, fully geared and positioned to aggressively compete w i t h i t s fellow Exchanges, contributing to wards the growth of Capital Markets in Pakistan.

History of LSE
Lahore Stock Exchange (Guarantee) Limited came into existence in October 1970,under the Securities and Exchange Ordinance, 1969, of the Government of Pakistan in r e s p o n s e t o t h e n e e d s o f t h e p r o v i n c i a l m etropolis o f t h e p r o v i n c e o f Punjab. It initially had 83 members and was housed in a rented building in the crowded area of Bank Square in Lahore. The number listed companie has increased to 519 since its inceptions. With 37 sectors of economy and 519 listed companies with total capital of Rs. 555.67 billion having market capitalization of around Rs. 3.64 trillion. LSE has1 5 2 m e m b e r s o f w h o m 8 1 a r e c o r p o r a t e 5 4 a r e i n d i v i d u a l m e m b e r s . L S E w a s f i r s t stock exchange of Pakistan which used

internet and currently 50% of its transactions are done on internet. Lahore Stock Exchange has opened branches in the industrial cities of Faisalabad and Sialkot for trading. The Sialkot branch is referred to as "Sialkot Trading Floor"

LSE Index25
The Lahore Stock Exchange Twenty Five company index also c a l c u l a t e s t h e performance of stocks a s s u m i n g t h a t a l l r i g h t s i s s u e s a n d bonus share issues only increase the listed capital. In the case of bonuses or rights the prices of the shares are not adjusted as they are in the case of the LSETRI. However, the LSE25 assumes that dividends paid out by a component company are not reinvested. In summary, in the L S E 2 5 , n o p r i c e a d j u s t m e n t s a r e m a d e w h e n a n y c o m p o n e n t c o m p a n y i s s u e s c a s h dividends. The Lahore Stock Exchange Total Return Index calculates the performance of stocks a s s u m i n g t h a t a l l p a y o u t s a r e r e i n v e s t e d i n t h e i n d e x o n t h e e x - d a t e . T h e L S E T R I assumes that if a component company issues bonus shares or announces a rights issue it will increase the listed capital. Additionally, the LSETRI also assumes that all pay-o u t s b y a c o m p o n e n t c o m p a n y a r e 1 0 0 % r e i n v e s t e d i n t h e i n d e x . T h e r e f o r e , t h e LSETRI is adjusted against such payouts announced by any of index constituents on its ex-date allowing the index value to remain comparable over time.

3. Islamabad Stock Exchange

Islamabad Stock Exchange is one of the three stock exchanges of Pakistan and is located in the capital of Islamabad.

History:The Islamabad Stock Exchange (ISE) was incorporated as a g u a r a n t e e l i m i t e d Company on 25th October, 1989 i n Islamabad Capital territory of

Pakistan with the main object o f s e t t i n g u p o f a t r a d i n g a n d s e t t l e m e n t i n f r a s t r u c t u r e , information system, skilled resources, accessibility and a fair and orderly market place that ranks with the best in the world. T h e p u r p o s e f o r e s t a b l i s h m e n t o f t h e s t o c k e x c h a n g e i n Islamabad was to cater to the needs of less developed are as of the northern part of Pakistan. The ISE has set the highest standards of operational efficiency and is committed to support a climate of confidence and optimism that encourages and promotes trading a c t i v i t y . I t a l s o p r o v i d e s f o r c o n d u c i v e e n v i r o n m e n t t o c h a n n e l i z e t h e s m a l l investments of the

residents of less developed areas. The ISE offers an easy access to b o t h d o m e s t i c as well as foreign investors and actively encourages the listing of eligible and profitable companies, both large and small to make it an exciting and diverse Exchange. The Exchange is playing a pivotal role for economic growth of the area thereby contributing towards the overall economic prosperity and welfare of the country. At present there are 118 members out of which 104 are corporate bodies including c o m m e r c i a l and investment banks, DFIs and brokerage

h o u s e s . T h e o t h e r 1 8 Members are individual persons who are well educated, enterprising and progressive minded. The affairs of the Exchange are governed by the Board of Directors. The B o a r d o f D i r e c t o r s c o n s i s t s o f t e n d i r e c t o r s , o f w h i c h f i v e a r e e l e c t e d m e m b e r directors and four are non-member d i r e c t o r s n o m i n a t e d b y t h e S E C P w h i l e t h e managing director by virtue of his office is the tenth director of the Board . In order to p r o t e c t t h e i n t e r e s t o f t h e i n v e s t i n g public, an Inve stors Protection fund has been established by the exchange Since the inception of automated trading system (ISECTS), the trade volume has been multiplying day by day and the average daily turnover has now crossed the figure of 1 million shares. Now all the listed securities are traded through the ISECTS. The system of physical handling of shares and securities has been phased out and majority of the scraps are settled through Central Depository Company of Pakistan Limited. A t t h e moment there are 248 companies/securities listed including 6 Open- End Mutual Fund and 4 TFCS on the Exchange with an aggregate c a p i t a l o f R s . 572,057.266 million. The market capitalization stood at Rs. 1,943,646.210 million as on 16-12-2008 . The pace of listing has remained slow as the economy of the Country is under consistent pressure due to internal as well as e x t e r n a l f a c t o r s . In comparison with major financial markets around the World, the functioning of c a p i t a l m a r k e t i n P a k i s t a n i s s t i l l v e r y much in its infancy and lacks advanced technology. In this context e f f o r t s a r e b e i n g m a d e t o b r i n g I S E i n l i n e w i t h t h e International system and methodology.