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The Role of Institutional Investors in Expanding the Market Institutional Investors Roundtable Conference Presented by: Mr. Aftab Ahmed Ch. Managing Director/CEO.

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Presentation on theme: "The Role of Institutional Investors in Expanding the Market Institutional Investors Roundtable Conference Presented by: Mr. Aftab Ahmed Ch. Managing Director/CEO."— Presentation transcript:

1 The Role of Institutional Investors in Expanding the Market Institutional Investors Roundtable Conference Presented by: Mr. Aftab Ahmed Ch. Managing Director/CEO Friday, August 23r d, 2013

2 Role of Institutional Investors » Institutions can help ensure that capital markets function as engines for economic growth » Institutional investors: » Improve participation and price discovery in primary market » Promote management accountability » Provide trading markets with liquidity the lifeblood of our capital markets » Provide stability to market in turbulent times » Sophisticated requirements help in development of trading products at exchanges 2

3 Infleunce of Institutional Investors » The proportion of U.S. public equities managed by institutions has risen steadily over the past six decades, from about 7 or 8% of market capitalization in 1950, to about 67 % in 2010 » The growth in the proportion of assets managed by institutional investors has been accompanied by a dramatic growth in the market capitalization of U.S. listed companies. » Public companies with the highest levels of institutional investment significantly outperformed those with the lowest levels. 3 Commissioner Luis A. Aguilar, U.S. Securities and Exchange Commission April 19, 2013-Georgia State University

4 Lahore Stock Exchange Market capitalization of $50 Billion 447 listed companies More than $12 Billion mobilized for the economy 2 nd Largest stock exchange in Pakistan after KSE Currently trading in Stocks, Bonds and Futures 152 TREC Holders; 72 Brokers Leader in Financial & Technology innovation Only Exchange with Regional Trading floors 4 The Lahore Stock Exchange was setup in nd Stock Exchange to be licensed in Pakistan The purpose for the establishment of LSE was to set up a trading venue in Punjab, which had the largest middle class and the largest number of medium industries and business houses in the country.

5 LSE – Associated Companies Associated Companies Central Depository Company of Pakistan Sole depository of shares Formed in 1993 LSE shareholding = 10% National Clearing Company of Pakistan Clearing & settlement company in Pakistan for the three exchanges Formed in 1999 LSE shareholding = 24% National Commodities Exchange Ltd. First automated and regulated commodities Exchange Formed in 2002 LSE shareholding = 17% Pakistan Credit Rating Agency First credit rating agency of Pakistan formed as joint venture of IFC & LSE Formed In 1994 LSE shareholding = 36% Facilities Management Co. Operating company for LSEs buildings Formed in 2013 LSE Shareholding = 100%

6 Marketplace Innovation & Protection Indigenously developed Trading Platform called ULTRAPromotes Anonymous TradingEfficient Risk ManagementClearing & Settlement through NCCPL-Direct settlement for InstitutionsAutomated Depository Facilities through CDCFirst Exchange to Launch SMS Trade Alerts to facilitate investorsFirst Exchange to explore regulatory function independenceFrequent conducting of Brokers System Audits in addition to investigative audit

7 LSE: At Forefront of Technological Innovation Trading Automation Introduced Electronic database in 1995 Introduced Automated Trading in Pakistan in 1997 Introduced Internet Trading in 2001 Trading Floors setup in Sialkot & Faisalabad in 2005 Launched Unified Trading System in 2007 Local & International Sales ULTRA sold to KSE (2002) & ISE (2003) BrokerNet sales started in 2004 ULTRA sold to Ghana Stock Exchange (2008) Securities Lending & Borrowing Software sold in 2009

8 LSE Outreach » Trading Floor in Faisalabad » 80 brokers branches in 16 cities » More than 20% of Registered UINs predominantly retail investors 8

9 TRADING ENVIRONMENT 9

10 Trading Products » Regular Market » Automated trading of Equities & Funds » Debt Securities Trading » Automated trading of Debt Securities » Futures » 30-days Deliverable Future Contracts » 90-days Cash Settled Future Contracts » 7-days Cash Settled Future Contracts » Short Selling through SLB » Margin Financing » Margin Trading 10

11 Trading Volumes 11 Year Total Volume Million Shares Pakistan55,46127,55554,14993,46384,40978,63791,03662,36466,41032,54645, ,486 LSE9,3034,45910,52115,47417,44917,87911,4757,8182,7723,8441, ,063 LSE %age17%16%19%17%21%23%13% 4%12%4% 2% +9% B2B Affirmed LSE originated volume The squared-up day trades and non-affirmed settlement trades may stand at twice of this amount according to a safe estimate

12 MARKETPLACE DEVELOPMENT INITIATIVES 12

13 Marketplace Revitalization 13 Market Related Projects Liquidity Network Project: Routing of orders to KSE in case of non-execution Brokers Outreach & Expansion: Issuing new trading rights and increasing branches networks After Hours Trading: Market timing extension to sync with US & European markets Mobile & Web Trading: Providing ease-of-access to investors National Market System: Attempting to unify all three exchanges liquidity pools Product Development Bonds & Derivatives Development Exchange Traded Funds Indexes Trading Depository Receipts New Market Development SME Market Spot Commodities Trading Currency Trading

14 Marketplace Revitalization-Listing » Corporate advisory services for non-listed companies » Stage 1: Solicitation of interest/time for briefing via letters/ /phone » Stage 2: Conduct of briefing/presentation at the premises of the company/enterprise concerned » Stage 3: Signing of the Non Disclosure Agreement, if interested for sharing the latest financial data with LSE's corporate finance team » Stage 4: Conducting Advanced Briefing for Highlighting the Tentative Enterprise Valuation and Industry Benchmarking/Comparison » Stage 5: Technical Briefing/Knowledge Sharing about the Pathways and Paperwork for Listing » Stage 6: Assistance, if any, in the search for the financial advisors and other practical matters about IPO preparedness 14

15 Marketplace Revitalization-Listing » Listing of such companies which are listed at KSE » Large, Medium & Small Cap Companies Listing Promotion » Annual IPO Summits » Investors Relations Programs for Companies » PUCAR » Corporate Data Research Portal/XBRL reporting » Investor Relations Program 15

16 Marketplace Revitalization- Investors Education » Campus Outreach Program 16

17 Marketplace Revitalization- Investors Education & Awareness » Corporate Briefing Programs » Weekly Investors Briefing Sessions & Monthly Investors Roundtables » Investors' Service Center » Seminars/Conferences/Road Shows under SAFE- Financial Literacy Initiative 17

18 Marketplace Revitalization Brokers Capacity Building » Brokers Continuous Professional Development » Preparation of Guide Book on Brokerage Business » Business Process Efficiencies through sharing of LSE's infrastructure Corporate Communication, Media Relations & Public Affairs 18

19 POSSIBLE BENEFITS TO INSTITUTIONAL INVESTORS Working at LSE 19

20 Major Benefits of working with LSE » Becoming Client of Brokers » Access to joint LSE-ISE liquidity pool » Robust regulatory regime for your protection » Ability to participate as financier » Enjoying general facilities & added-services offered by the Exchange » Becoming a TREC Holder » Brokerage Operations » Incomes through participation & preferential treatment in projects such as LNP, Algo Trading, Spot Commodity, infrastructure projects » Participation as financier in MT market (higher margins)

21 21 THANK YOU How can we be of your service?


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