1 | Page

DEDICATION

ALL PRAISES FOR ALMIGHTY GOD ,THE CREATOR OF THE WORLDS AND THE HEAVENS.....WE DEDICATE THIS FEEBLE WORK TO OUR BELOVED PARENTS ,LIVING LEGENDS OF EXCELLENCE FOR OUR LIVES WITHOUT THEIR KNOWLEDGE AND WISDOM AND GUIDANCE,WE WOULD NOT HAVE ACHIEVED THE GOAL WE HAVE STRIVED FOR….AND TO ALL THOSE WHO PRAY FOR US…

Acknowledgement

Project in any field of study is the kind of achievement for which every student is looking for and thinking upon throughout his academic session that what it should be & how should it be completed. It is definitely a keen desire of every student to full fill his requirement. It needs through study untiring efforts, hard work with full devotion towards the cause and last but not the least proper guidance and corporation from seniors and instructors.

We extend our gratitude to “Sir Salman Masood” whose guidance throughout the project and broadened vision by his ample experience and served as a lighthouse in this incredible venture for completion of the project.

Table of Contents

  1. Stock Exchange6
  2. Role of Stock Exchange 6
  3. LSE (Guarantee) Ltd7
  4. Management of LSE (Guarantee) Ltd 8-9
  5. Terms used in Stock Exchange 10-12
  6. Types of market13
  7. Stock market charts13
  8. The Volume Bar14

7.2 The Low and High Value Indicator14

7.3 The Open and Close Marker. 14

  1. Stock Analysis14
  2. Fundamental Analysis of Stocks14
  3. Technical Analysis of Stocks in the Stock Market14
  4. Index Method15
  5. Comparative Analysis of Stocks15

8.5 Stock Analysis Software15

8.6 Online Stock Analysis15

  1. Capitalization of Lahore stock exchange Guarantee Ltd16

9.1 Advisory $ Arbitration Committee16

9.2 Arbitration Committee 16

9.3 Defaulters Committee16

9.4 Audit Committee 17

9.5 Human Resources Committee17

9.6 Investment Committee17

10. Working of Lahore Stock Exchange Guarantee Ltd18

10.1 Shares18

10.1.1 Selling of shares 18

10.1.2 Why do companies issue shares?18

10.2 Various ways of becoming a shareholder 18

10.2.1 Initial Public Offering (IPO)18

10.2.2 Right Issues 18

10.2.3 Trade Market 18

10.2.4 What happens once you are a Shareholder?18

10.3Important Consideration for Investors19

10.3.1 Why do investors buy shares?19

10.3.2 Risks and rewards19

10.3.3 How to invest?19

10.3.3.1 How much money can you afford to invest?19

10.3.3.2 How Do You Want to Invest?19

10.3.3.3 Finding Share Price20

10.3.3.4 Finding the Company20

10.3.3.5 Consider the Company's Size20

10.3.3.6 Consider the Company's History20

10.3.3.7 Consider the Company's Product or Service20

10.3.3.8 Consider the Company's Earnings20

10.3.4 How to Increase Earnings per Share21

10.3.4.1 Invest for the Long Term21

10.3.4.2 Invest Wisely21

10.3.4.3 At Least Consider Compounding Your Investment21

10.3.4.4 Invest Regularly21

10.3.4.5 Advice or Own Decisions for share dealing21

10.3.5 Registration process of new investor21

10.3.6 How to trade?22

10.3.6.1 How to Find the Right Stock Market to Do Trade With23

10.3.6.2 Trading and Settlement System23-24

10.3.7 How price of stock determined25-26

10.3.8 Listing at the LSE26

10.3.9 Process of transaction27

  1. Lahore stock exchange Guarantee Ltd in 201128
  2. Future Outlooks ofLahore stock exchange Guarantee Ltd28
  1. STOCK EXCHANGE

A stock exchange is an institute which provides stock brokers and traders an opportunity to trade stocks and other securities. The main purpose of stock market is to enable the buyers and sellers to exchange securities.It is simply a market that is designed for the sale and purchase of securities of corporations and municipalities. At first, stock exchanges were completely open. Anyone who wished to buy or sell could do so at a stock exchange. However, to make stock exchange more effective, membership became limited to those in clubs and other associations. Today, professionals who have a seat at the exchange are the people who trade at the exchange.
Stock markets affect the entire economy and encourage investment. In the United States, larger cities including Boston, New York, Philadelphia, Denver, Chicago, Los Angeles, and San Francisco all have stock exchanges. Major cities across the world also have exchanges of their own. Not all stocks are listed on exchanges. Some are sold on the so-called over-the-counter market, which means that they are sold and bought directly by brokers. This method of buying became especially important during the early 1980s (E estockwise).

  1. Role of Stock exchange
  • The stock exchange admits companies for trading at their securities.
  • It provides a market for raising capital by companies.
  • It provides a market place for shares of listed public companies to be bought and sold by bringing companies together at one place.
  • The exchange’s role is to monitor the market to ensure that it is working efficiently, fairly and transparently.

Howeverin Pakistan three Stock Exchanges are working;

  • Karachi Stock Exchange (Guarantee) Ltd.
  • Lahore Stock Exchange (Guarantee) Ltd.
  • Islamabad Stock Exchange (Guarantee) Ltd.
  1. LAHORE STOCK EXCHANGE (GUARANTEE) LTD
  • The Lahore Stock Exchange was incorporated as a company Limited by Guarantee under the Companies Act 1913 on 5th October, 1970and is the second largest stock exchange in the country with a market share of around 12-16% in terms of daily traded volumes. In the first General meeting of the Board of Directors held on the same day, it was decided that the Exchange will commence its working by December 1970. It was the third Exchange in the country after Karachi and Dacca. The 1st Registered office of Lahore Stock Exchange (G) Limited was located at 17-Bank Square, Lahore.
  • Activities of Lahore Stock Exchange(LSE)have increased significantly in all operational areas since its beginning. Over the years, LSE has successfully met various challenges and has now emergedand positioned to aggressively compete with its fellow Exchanges, contributing towards the growth of Capital Markets in Pakistan (Lahore Stock Exchange).
  1. Management of Lahore stock exchange Guarantee Ltd

NAMEDESIGNATION

  1. Mr. Aftab Ahmad KhanChairman
  2. Mr. Aftab Ahmad Ch.Managing Director / CEO
  3. Mr. Farid Malik, CFAChief Strategy Officer / Chief Operating

Officer (General Manager)

  1. Rana Naveed AhmedChief Regulatory Officer / Acting Secretary
  2. Mr. Khurram ZafarChief Information Officer
  3. Mr. Ammar-ul-HaqElected Director
  4. Mr. Jahanzeb MirzaElected Director
  5. Engr. Mazhar RafiqElected Director
  6. Mirza Ejaz Ullah BaigElected Director
  7. Mr. Naeem AnwarElected Director
  8. Ms. Bushra Naz MalikNominee Director
  9. Mr. Muhammad Masud AkhtarNominee Director
  10. Mr. Mumtaz Hussain SyedNominee Director

Mr. Aftab Ahmad Khan, Chairman:

Mr. Aftab Ahmad Khan is a Fellow Member of the Institute of Chartered Accountants of Pakistan. He has diversified professional experience of over 40 years. Presently he is on the Board of a Commercial Bank, Textile, Paper, Energy and Hotel/Tourism sectors of various companies. As a Group Director (Finance & Accounts) he looks after financial and strategic planning and investment appraisal for the Group. He also served in public Sector Organizations including Punjab Industrial Development Board dealing with Ghee, Sugar and Rice Milling etc. He also practiced in Chartered Accountants Firms at various positions.

Mr. Aftab Ahmad Ch., Managing Director / CEO:

Mr. Aftab Ahmad Ch has been the Managing Director/CEO of the Lahore Stock Exchange (G) Limited since October 2010.During the earlier capital market assignment, Mr. Aftab served as the Managing Director/Chief Executive Officer of Islamabad Stock Exchange, Pakistan. Mr. Aftab has also been involved with the Board level work related to the system designing & implementation ofthe domestic nationwide structure for the Securities Clearing and Settlement Company, as well as for the regulatory and product development related work at the Board level for the operations of the only commodity exchange in Pakistan. In the recent past, Mr. Aftab has also served on the Board of Directors of other capital market institutions in Pakistan such as M/s JCR-VIS-a leadingindependent corporate credit rating agency in Pakistan, and the Institute of Capital Markets.Mr. Aftab holds an MBA degree from Nicholls State University, Thibodaux (LA), USA, and has also attended Executive Management Program at the Stanford University, USA. He has also attended many other securities market related programs both at home and abroad.

Mr. Farid Malik, CFA:

Mr. Farid Malik heads the Strategy and Operations functions of the Exchange. He has over 15 years of work experience and has worked on a number of infrastructure developments (IPPs), project finance, and corporate finance, regulatory, administrative and operational assignments both in Pakistan and abroad. Mr. Malik has a rich background of the securities/ capital market industry having previously worked at LSE and the Securities and Exchange Commission of Pakistan. Mr. Malik is a graduate of the London School of Economics and a Chartered Financial Analyst (CFA) Charter-holder since 2001. He has also attended a number of international and local management courses, seminars and workshops. Additionally he also currently serves on the Board of the Privatization Commission and as an addition Faculty Member at Suleman Dawood School of Business - LUMS. He is representing LSE on the Board of Directors of Pakistan Credit Rating Agency Limited.

Rana Naveed Ahmed, CRO

Rana Naveed Ahmed joined LSE in 1992 as Assistant Secretary. He started his work as Secretary of the various Board Committees in addition to handling Investors' complaints. He has been the ISO Coordinator and prepared the Quality Manual and relevant documents/procedures for ISO 9001 certification of LSE. He was promoted as Manager Company Affairs in 2006 and dealt with the new listings and enforcement & compliance of Listing Regulations. In the year 2011, he was appointed as CRO / Acting Secretary. He holds Master Degree in Commerce from Hailey College of Commerce, University of the Punjab. He has worked as a member of project team of the study project on "Strengthening Stock Exchange Listing Regulations in Member Countries", undertaken by South Asian Federation of Exchanges (SAFE) and has visited the Stock Exchange of Mauritius in 2003. He has also attended various courses/conferences on HR management, Corporate Governance and Corporate Affairs. Before joining LSE, he worked for 2 years in Daily Jang as Accounts Assistant.

Mr. Khurram Zafar, CIO

Mr. Khurram Zafar heads the Technology Services Division entrusted with maintaining LSE's position in the national capital markets landscape as a technology innovator. Prior to joining LSE, Mr. Zafar worked for Beaconhouse National University as a visiting faculty member and giving the spirit of entrepreneurship in BNU's graduating BSc Honors students. Before his period in the field of academia, Mr. Zafar was Co-Founder and Chief Technology Officer at Insight Technologies, Inc and Epiance, Inc - both Silicon Valley based software product companies with operations in Pakistan and India respectively (Lahore Stock Exchange).

  1. TERMS USED IN STOCK EXCHANGE
  1. “Agent” means, a securities firm is classified as an agent when it acts on behalf of its

clients as buyer or seller of a security.

  1. “Bid” means,the highest price a buyer is willing to pay for a stock. When combined with

the ask price information, it forms the basis of a stock quote.

  1. “Board” means, “Board of Directors of the Lahore Stock Exchange (Guarantee)

Limited”.

  1. “Broker” means, “Any member of the Exchange engaged in the business of executing a

transaction in securities for the account of others and for his own account and is

registeredwith the Commission under the Brokers and Agents Registration Rules,2001.”

ORA Stock exchange has been an association of individual members called memberbrokers these brokers are formed to regulate and facilitate the trade of securities.

5.“Capital Growth” means, the way in which shares differ from deposit accounts. The principal amount of money you put in a bank or any fixed income savings scheme always stays the same e.g. if you start with Rs. 100000 /- you will always have Rs. 100000/- (other than any interest earned) changes in value according to the performance of the company. With good management, the value of your investment in shares of a company can grow over time so that your shares are worth more than you paid for them.

6.“Capital stock” means,all shares representing ownership of a company, including preferred and common shares.

  1. “CDS” means,Electronic book-entry transfer of securities i.e. CDS has been set up to eliminate physical transfer of securities. This new book-entry system is in line with the international practice and has replaced the manual system of physical handling and settlement of shares at stock exchanges. Within the CDS, transfer of shares from one client to another takes place electronically. The CDS is managed by the Central Depository Company of Pakistan Ltd, which has been sponsored by the stock exchanges and leading local and financial institutions. Presently, 97 % of settlements are routed through CDS. Investor Account Services have been introduced in order to facilitate individual investors to maintain their account directly with the CDC.
  2. “Clearing Company” means, “the National Clearing Company of Pakistan Limited”
  3. “Clearing House” means the Clearing House of the Exchange.
  4. “Closing Price” of a security in this market means the price as prescribed under

Regulations Governing Risk Management of Lahore Stock Exchange (Guarantee)

Limited, as amended from time to time.

  1. “Commission” means, “Securities and Exchange Commission of Pakistan”.
  2. “Common stock” means, Common stock is the most basic kind of stock that a company can produce. Owning common stock from a company means that the stockowner owns a piece of the company. This ownership can be executed through his voting rights: one share, one vote. Proprietors of common stock can choose the members of the board and even decide determined policies. Besides the voting rights, there are occasions in which common stock owners have preventative rights. These rights permit common stock owners the possibility of owning the same percentage of the company in case the organizations produce new stock. So, any common stock owner can buy, if he chooses to do so, an additional percentage of stock in order to maintain his level of ownership of the corporation. Finally, common stock owners can receive dividends for their shares. If the board of directors approves common stock dividends, a determined amount of money is distributed among the thousands of people who have bought common stock.
  3. “Preferred Stock” meanshas additional benefits.

Convertible Preferred Stock. In this kind of stock, the stock owner has the option of

converting his preferred stock into common stock at a determined price.

Perpetual Preferred Stock, where the owner of the stock hasn't a set date for receiving their invested capital. The dividends on this type of preferred stock simply accumulate over each other until the board of directors makes a decision.

Distribution of Preferred Stock

  • Maybe the most important one is that the dividends obtained by a company are distributed, first, among owners of preferred stock. But, there is an additional plus.
  • In case the company goes through a process of insolvency or bankruptcy, the first stockowners who are going to receive a payment for their shares are the ones who own preferred stock.

Difference between Common Stock and Preferred Stock

  • Dividends paid by preferred stock are much bigger than the ones paid by common stock.
  • Preferred stock owners receive pre-defined payments, while common stock owners depend on the decision of the board of directors.
  • As a consequence, preferred stock owners can use their shares as a fixed-income security.
  1. “Contract Multiplier” means, “the number of underlying shares in the contract,

Currentlyfixed at 500. The contract multiplier is subject to change when adjustments are

made withrespect to corporate actions.”

  1. “Contract” means, “Standardized Cash-Settled Stock Futures Contract”.
  2. “CSF Market” or “Market” means, “the market where Cash Settled Futures Contracts

aretraded.”

  1. “Daily Settlement Price” means the Closing Price in the Cash-Settled Futures Contract

Market.

18.“Dividend Stocks” means, Dividend stocks are those stocks that pay a yearly dividend or cash amount in addition to having an inherent buying and selling value. Having high dividend stocks means that you make money each year that a company profits.

  1. “Exchange” means, “The Lahore Stock Exchange (Guarantee) Limited”.
  2. “Final Settlement Price of a scrip” means, “The average bid/ask quote of the scrip in the Ready Market which would be calculated as a ratio of A/B where “A” equals the sum of market bid and ask prices taking the best bid and best ask price of the scrip during each one minute interval for last two hour trading on the last trading day of the Contract or where no trading takes place on that day, the immediate preceding trading day. “B” equals the total number of bid and asks prices sampled i.e. 240. The final settlement price thus arrived at shall be rounded to the nearest paisa per unit or other such amount per unit determined by the Exchange”.
  3. “Free-Float” means, “the number of shares readily available for sale as determined by the Free-Float methodology recommended by the Board from time to time and approved by the Commission.”
  4. “Index” means, Stock exchange index shows “Trade of shares” of top companies.KSE 100 INDEX shows the trade of shares of top 100 companies in market. LSE 25 index shows the top 25 companies’ shares.
  5. “Stock Index” means,Stock index uses a set of stocks that are representative of the whole market, or a specified sector to measure the change in overall behavior of the markets or sector over a period of time.
  6. “Listing” means,Listing means formal admission of a security to the trading platform of a stock exchange, invariably evidenced by a listing agreement between the issuer of the security and the stock exchange.
  7. “Member” means “Member of the Exchange.
  8. “Open interest in a Scrip” means, “the total number of Contracts, of a Broker and his clients, of a scrip that have not been offset and closed at any point in time by an opposite transaction. For calculation of open interest only one side of the Contracts is counted.”
  9. “Open Position in a Scrip” means, “the sum of long and short positions of a Broker and his clients at any point in time in a Contract for that scrip”
  10. “Share” means, the smallest recognized fraction of ownership in a publicly held business. Each such fraction of ownership is represented in the form of a certificate known as a share certificate. The breaking up of total ownership of a business into small fragments, each fragment represented by a share certificate, enables them to be easily bought and sold.
  11. “Stock Ticker” means, The stock ticker, or the stock market ticker, as it is widely known, shows the current prices of stocks, shares, bonds, and mutual funds in a multimedia or dynamic format. Stock tickers are used in many financial institutions, where traders use the financial information they see to make investment decisions. Tickers also used on news programs and many investment programs to show investors how stocks and shares are doing. Online, a number of web sites use tickers so that online audiences can see how their shares and stocks are doing. Basically, stock market updates are available in ticker format wherever there are investors and interested parties watching. There are even television stations that offer nothing but a running feed of market prices! You can use a ticker to get the latest stock market quotes. This can help you with stock trading and can help simplify stock picks for you. To use an example, let's say that you are interested in buying shares in a national company. You decide that you want to buy them as cheaply as possible so that you can invest in as many shares as possible. By watching a ticker on the news or online, you can see the exact moment when the stock prices begin to fall and can use that moment to buy your stock. This allows you to buy at the most advantageous time. Conversely, if you want to sell stocks or sharers, you can simply wait until you notice prices begin to float upwards before selling. A ticker quite simply can help you make the right financial investment decisions and can help you buy stocks inexpensively and sell them for as big a profit as possible (Lahore Stock Exchange).
  1. Types of Market
  1. Bear market.
  2. Bull market.

Bear market: Bear market is one where prices are falling.