Research report on Pakistan Stock i

Exchange…..

 Noori uli Hassan---061

 Ibtahal--------------032
 Sidra----------------021
 Salman-------------016
 Iftikhari waqar-----07
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AUTHORS
Wei arei Noori ULi Hassan,i Iftikhar,i Salman,i Ibtahali andi Sidra.i Pakistani stocki exchangei
hasi beeni giveni toi thisi groupi toi observei andi analyzei itsi procedures,i disciplinesi andi
performance.i Thisi groupi belongsi toi Superiori Universityi andi goingi toi presenti thei
overalli disciplinesi ofi PSXi accordingi toi fundamentali ofi corporatei finance.i Currentlyi
wei arei ini firsti semesteri andi instructori allottedi usi toi preparei ai grandi reporti oni PSX.i
Eachi assignmentsi desirei completei research,i efforts,i bodyi andi mentali participation,i ai
loti i ofi personali interesti ini makingi iti asi explanatoryi asi iti cani be.i Alli researchi toolsi andi
tacticsi hadi beeni involvedi ini gatheringi ofi datai (internet,i officiali websites,i andi relevanti
books).

CREDIT
Ii wouldi likei toi specifici myi extraordinaryi muchi obligedi ofi appreciationi toi Allah,i thei
mosti Kindi andi thei mosti Generous,i whoi offeredi usi poweri andi enabledi usi toi accomplishi
ouri objectives.i Thei subjecti ofi ouri taski wasi thei comprehensivei researchi reporti oni
Pakistani stocki exchange.i Duringi thisi task,i wei hadi toi facei somei difficultiesi asi datai wasi
noti readilyi available;i wei hadi toi goi toi differenti websitesi i toi collecti datai afteri havingi
somei solidi referencei andi theni sorti outi relevanti datai fori ouri task.i Wei wouldi likei toi
specifici myi speciali thanksi ofi appreciationi toi ouri instructori Prof.i Dr.i Salmani Masoodi
fori hisi continuousi andi pre-emptivei andi continuousi support.i Withouti heri supporti wei
wouldi noti havei beeni capablei toi completei ouri taski oni timelyi manner.

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CONTENTSI OFI STOCKI EXCHANGEI BUSINESSI REPORT:

1- STOCKi EXCHANGEi UNDERSTANDINGi ANDi WORKING:

 Knowi Youri Brokers/Agentsi andi Theiri Enrolledi Branches.
 Openingi ofi Accounti ini Possessi Name.i
 Fillingi ofi Standardizedi Accounti Openingi Shape.
 Provisioni ofi Obligatoryi Dutyi Structurei toi Clients.i
 Placementi ofi Exchangingi Orders/Instructions.
 Onlinei Trading.i
 Obligationsi ofi Clientsi toi Storei Edges.i
 Modesi ofi Installmentsi /Receipts.
 Righti toi Geti Recordi Subtlei elementsi Appearingi Cashi andi Securitiesi
Positions.
 Mandatoryi Arrangementi ofi Quarterlyi Accounti Explanationsi byi SEi
Brokers.i
 Prescribedi Chancei Disclosurei Document.
2- INITIALi PUBLICi OFFERINGS:
 Whyi listi oni thei Stocki Exchange?i
 Reasonsi toi doi ani IPOi (Initiali Publici Offering)i
 Whati arei thei requirementsi fori ani Initiali Publici Offering?i
 Whati arei thei proceduresi ofi ani Initiali Publici Offering?i
i. Techniquesi ofi distributioni ofi securities.i
ii. Thei proceduresi ofi thei firsti listing.
iii. Thei procedurei ofi directi registration.i
iv. Thei procedurei ofi Fixedi Pricei Offer.
v. Thei procedurei ofi Openi Pricei Offer.
vi. Thei procedurei ofi Lowesti Pricei Offer.i
 Whoi doesi ani Initiali Publici Offering?i i
3- REFERENCES:

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1. Stocki Exchangei Understandingi andi Working:

Understandingi thei securitiesi marketi isi fundamentali toi creatingi informedi tradingi
choices.i Youi needi toi understandi thei wayi toi selecti thei properi stocks,i whichi needsi ani
in-depthi understandingi ofi ai company’si annuali reporti andi budgetaryi articulations.i findi
outi howi toi urgei iti whati stocki speaksi toi ini ani exceedinglyi companyi andi thei wayi toi
decidei oni thei honesti toi goodnessi esteemi ofi anyi stock.i Thisi grantsi youi toi createi
prevalenti contributingi choicesi byi avoidingi thei exorbitanti botchi ofi obtainingi ai
company'si stocki wheni thei advertisementi hasi pushedi itsi sharei fetchedi alsoi asi talli
relativei toi itsi esteem.
Financiali terms:

Thei firsti stepi toi understandingi thei stocki marketi knowsi thei financiali factors.i Herei arei ai
fewi commonlyi usedi words.

 Earningsi peri share:

Thei totali companyi profiti dividedi byi thei numberi ofi stocki sharesi outstanding.
 Goingi public:
Slangi fori wheni ai companyi plansi toi havei ani IPOi ofi itsi stock.
 IPOi (initiali publici offering):i
Shorti fori initiali publici offeringi wheni ai companyi sellsi itsi sharesi ofi stocki fori thei
firsti time.
 Marketi capitalization:
Shorti fori marketi capitalizationi thei amounti ofi moneyi youi wouldi havei toi payi ifi
youi boughti everyi singlei sharei ofi stocki ini ai company.i Toi calculatei marketi
capitalizationi multipliesi thei numberi ofi sharesi byi thei pricei peri share.
 Share:i
Ai sharei ori ai singlei commoni stocki representsi onei uniti ofi ani investor’si
ownershipi ini ai sharei ofi thei profitsi lossesi andi assetsi ofi ai company.i Ai companyi
createsi sharesi wheni iti carvesi itselfi intoi piecesi andi sellsi themi toi investorsi ini
exchangei fori cash.
 Tickeri Symbol:i

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Ai shorti groupi ofi lettersi thati representsi ai particular i stocki asi listedi oni thei stocki
market.i Fori example,i Thei Coca-Colai Companyi hasi ai tickeri symboli ofi KO,i andi
Johnsoni &i Johnsoni hasi ai tickeri symboli ofi JNJ.
 Underwriter:i
Thei financiali institutioni ori investmenti banki thati doesi alli ofi thei paperworki andi
orchestratesi ai company’si IPO.

Recognize Your Agents and Their Listed Branches:

i i i i i i

Accordingi toi ouri research,i wei arei sayingi thati thei Securitiesi Brokersi (Authorizingi andi
Operations)i Rulesi 2016i encompassedi underi Securitiesi Acti 2015i requirei ai merchanti toi
bei authorizedi andi enrolledi asi Securitiesi Brokeri (withi SECPi soi oni playi outi thei
obligationsi ofi ai PSXi Broker.i Additionallyi thei PSXi Brokeri shouldi bei selectedi withi
SECPi toi performi thei ai parti ofi ai specialist.i Toi affirmi thei enrollmenti subtlei elementsi ofi
PSXi Brokersi andi theiri prosi isi thati thei primaryi stepi developmenti alli financiali
specialistsi shouldi desirei makei surei thati theyi tradei throughi ani appropriatelyi registeredi
personi andi ati ani enlistedi put.i Ini spitei ofi thei actuali facti thati investori shouldi huntedi fori
fromi PSXi Brokers/operatorsi thei datai ori thei relatedi datai toi differentiatei theiri
enrollmenti numbersi andi otheri relatedi subtlei elementsi sometimei recentlyi startingi
commercei withi themi andi coordinatei thei identicali withi theiri enrolledi subtlei elementsi
countingi subtlei elementsi distinguishingi withi theiri selectedi departmenti workingi
environmentsi availablei oni PSXi site.i Thei confirmationi ofi thei brokeri andi theiri enrolledi
officei isi exceptionallyi crucial.i Authorizedi brokeragei firmsi are;

 Altafi Adami Securitiesi (Private)i Limited.

 Muhammadi Hussaini Ismaili Securitiesi (Private)i Limited.
 Shermani Securitiesi (Pvt.)i Ltd.
 Amanahi Investmentsi Limited.
 Optimusi Capitali Managementi (Pvt.)i Ltd.
 Sakarwalai Capitali Securitiesi (Pvt.)i Ltd.
 ACMi Globali (Private)i Limited.
 Reliancei Securitiesi Limited.
 DJMi Securitiesi (Pvt.)i Limited.
 Sayai Securitiesi (Private)i Limited.
 Ismaili Iqbali Securitiesi (Pvt.)i Limited.

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 iii Summiti Capitali (Private)i Limited.

Opening of Account in Own Name:

i i i i i

Accordingi toi ouri research,i wei sayi thati stepsi toi starti investingi ini stocksi are;
Beforei starti tradingi wei needi toi knowi thei answeri toi thei followingi thingsi giveni below:

 Definei youri investmenti objectives.

 Shortlisti ai numberi ofi registeredi andi licensedi brokeragei firmsi basedi oni youri
preferences.
 Selecti ai brokeragei firmi thati fitsi youri requirement
 Openi ai Brokeragei Account,i CDCi Subi Accounti andi ai CDCi Investori Account.

 Depositi fundsi ini youri accounti throughi cheque.

Selecti thei companiesi toi investi ini basedi oni somei ori alli ofi thei parametersi mentionedi ini
thei Basici Guidelinesi fori Stocki Investment,i youri preferencesi andi discussingi thei samei
withi youri stock-broker.i Therebyi buildingi youri portfolio.
Starti investing:

Afteri thei choicei ofi youri brokeragei firm,i you'lli openi ani account.i youi wanti toi makei surei
thati thei saidi Accounti isi openedi ini youri name.i youi willi bei giveni ai Clienti
Distinguishingi proofi Numberi ori ani Accounti Numberi againsti thisi account.i Examinedi
thei termsi &i conditionsi endorsedi withini thei Accounti Openingi Framei andi makei beyondi
anyi doubti thati theyi matchi withi thei qualityi Accounti Openingi Framei accessiblei oni thei
PSXi site.

 Subsequentlyi you'lli openi ai CDCi Subi Account.i Thei CDCi Subi Accounti isi thei
accounti throughi whichi you'lli actuallyi exchangei thei securitiesi market.
 Youi alsoi arei encouragedi toi openi ai CDCi Investori Account.i Thisi accounti isi
openedi ati thei CDC,i therebyi addingi toi greateri safetyi andi individuali custodyi ofi
youri shares.
 Youi willi depositi initiali fundsi toi geti shares.i confirmi thati it'si noti ai cashi deposit.

Therei arei fewi stepsi thati wei needi toi followi whilei openingi ani accounti ini stocki exchangei
fori tradingi throughi registeredi broker.

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 Wei cani geti ani accounti openingi formi fromi thei registeredi officei ofi thei broker/i
fromi theiri branchi office.
 Accounti openingi formsi musti includei thei basici clausesi asi mentionedi ini thei
Standardizedi Accounti Openingi Formi whichi isi ai parti ofi thei Generali
Regulationsi ofi thei Exchangesi (thesei regulationsi arei availablei oni thei websitei ofi
thei exchanges).
 Whilei filingi upi thei Accounti Openingi Form,i ani investori (we)i isi advisedi toi readi
carefullyi alli thei instructionsi printedi therein,i andi ifi therei isi anyi uncertaintyi
regardingi anyi clausei iti isi importanti toi alwaysi consulti thei broker.i Ifi thei queryi isi
noti addressedi satisfactorily,i wei cani contacti thei Exchange'si managementi and/ori
thei SECP.

Whilei fillingi thei Accounti Openingi Formi wei arei advisedi toi bei aware.

 Wei shouldi neveri signi anyi blanketi authorityi allowingi thei brokeri ori agenti ori thati
companyi toi transacti oni theiri behalf,i unlessi andi untili he/shei cani clearlyi identifyi
thei benefits/specifici purposei ofi suchi authority.
 Ai copyi ofi thei certifiedi andi dulyi signedi copyi ofi thei Accounti Openingi Formi
shouldi bei kepti fori record.
 Remember,i thati thei Subi Accounti Openingi Formi doesi noti includei ai general-
purposei authorizationi toi thei brokersi toi takei carei ofi theiri client’si securities.i
Nevertheless,i specifici authorizationi fori managingi thei securitiesi mayi bei giveni
outi byi thei client.

Placei youri orderi &i geti confirmation:

Afteri fillingi outi youri Accounti Openingi Framei andi signingi thei same,i you'lli bei requiredi
toi depositi thei leasti amounti toi begini contributingi withini thei stocki market.i Makei surei
thati thei samei isi depositedi throughi cheque.i You'rei moreoveri advisedi toi keepi yourselfi
educatedi aroundi thei chargesi andi chargesi requiredi byi thei Stocki Trade,i Centrali
Depositoryi Companyi Constrainedi Nationali Clearingi Companyi ofi Pakistani Restricted,i
Securitiesi &i Tradei Commissioni ofi Pakistan,i andi thei Governmenti Boardi ofi Incomei
againsti thei exchangesi youi willi carryi outi ati thei Stocki Exchange.i Oncei youi openi youri
accounti andi depositi youri startingi installment,i you'lli bei ablei toi contributei withini thei
stocki market.i Makei beyondi anyi doubti merelyi geti youri Exchangei Affirmationsi fromi
youri stock-brokeri againsti youri purchasei andi offeri toi arrangei enlightening.i You'rei

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moreoveri entitledi toi geti youri accounti recordsi andi explanationsi againsti youri accounti
movementi fromi youri stock-brokeri intermittently.i

Paymenti ofi transactionsi &i stocki marketi ecosystem:

Thei sharesi purchasedi ori soldi arei settledi (installmentsi madei ori received)i throughi
NCCPLi (Nationali Clearingi Companyi ofi Pakistani Limited).i Thei exchangei ofi sharesi
takesi placei throughi thei CDCi (Centrali Storei Companyi Restricted).i Thesei twoi
organizationsi andi thereforei thei brokeragei firms/i TRECi holdersi framei thei maini portioni
ofi thei environmenti ofi PSX.

Attachments:

 CNICi attestedi photocopyi ofi A/ci Holder

 CNICi attestedi photocopyi ofi Jointi Holderi (onlyi ini casei ofi jointi A/C)
 CNICi attestedi photocopyi ofi Nomineei (Ini casei ofi jointi accounti noti required)
 CNICi photocopyi ofi Witnessi 1
 CNICi photocopyi ofi Witnessi 2i
 Zakati Declarationi oni Stampi Paperi Rs.50i
 Sourcei ofi incomei (jobi certificate/businessi evidence,i etc.)
Facilityi toi openi investori accounti withi CDC:
CDCi givesi ai superbi alternativei toi thei Clientsi toi openi andi maintaini Investori Accounti
straightforwardlyi withi CDCi fori thei securei andi safei custodyi ofi securitiesi asi they'rei
directlyi maintainedi byi CDCi withouti thei inclusioni ofi PSXi Broker.i Financiali specialisti
Accounti holdersi havei directi andi totali controli overi theiri securitiesi asi thisi accounti isi
operatedi onlyi oni instructionsi ofi investor(s).i Multiplei ‘Valuei Includedi Services’i arei
accessiblei oni thisi accounti aroundi thei clocki fori viewingi Accounti &i Cashi Adjust,i
Accounti &i Cashi Exercisesi throughi ani ardenti webi portal,i Interactivei Voicei Reactioni
(IVR),i SMS,i e-Statementi &i e-Alerts.
Filling of standardized account opening form:
i i i i i

Accordingi toi ouri research,i wei sayi thati youri brokeri isi requiredi toi adopti thei
standardizedi accounti openingi framei fori theiri investors.i Thisi isi thei framei ofi contractuali
agreementi containsi termsi andi conditionsi thati bindi thei brokeri asi welli asi thei investor.i
Asi Ii havei specifiedi overi iti isi vitali fori ani investori toi filli alli thei significanti areasi thati
havei beeni giveni ini thati form,i iti isi mandatoryi toi starti tradingi ini stocki advertisei Thisi isi
ofteni thei correcti ofi thei financiali specialisti toi guaranteei fromi thei brokeri thati alli thei datai

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withini thei framei stayi samei conjointlyi cannoti bei changedi withouti theiri consent.i Iti isi
additionallyi mandatoryi fori thei clientsi toi supplyi ori filli currenti andi adjusti informationi
withini thei framei andi joinedi ori givesi alli thei relatedi archivesi requiredi byi thei brokeri ori
saidi withini thei frame.i Thei clienti oughti toi examinedi andi geti iti alli termsi andi conditionsi
thati havei giveni withini thei framei andi youri brokeri toldi youi around.i Appropriatelyi
markedi ai duplicatei ofi thei framei giveni toi thei clienti andi toi thei brokeri fori recordi reason.
Mandatory tariff structure to customers:
i i i i

Accordingi toi ouri research,i wei arei sayingi thati eachi PSXi Brokeri isi requiredi byi lawi toi
producei itsi Customersi ai dulyi signedi copyi ofi thei applicablei tariffi schedulei containingi
thei subsequenti information.
 Commissioni ratei andi thei otheri charges
 Applicablei regulatoryi leviesi i.e.i tradei ori transactioni feesi ofi PSX,i CDC,i
NCCPLi andi SECPi etc.
 Applicablei statutoryi leviesi i.e.i taxesi andi dutiesi ofi thei federali andi provinciali
government.
Clientsi musti receivei fromi itsi PSXi Brokeri ai replicai ofi thei above-mentionedi taxi
structurei ati thei timei ofi openingi accounti andi browsei thei identicali toi comei toi ai decisioni
thei exchangei takeni ai toll.i Noi changei withini thei commissioni ratei mighti takei impacti
unlessi thei changei isi agreedi andi appropriatelyi signedi byi thei Clienti andi thereforei thei
PSXi Broker.
Asi ofi late,i Dutyi fori thei yearlyi expensei ofi redeemablei securitiesi hasi toi beeni
considerablyi decreasedi byi nearlyi 70i percenti toi bolsteri corporatei obligationi showcase.i
Assist,i thei SECPi hasi tooi endorsedi decreasei ini carei chargei fori followingi twoi ai longi
timei byi 14i percenti andi 16i percenti fori 2020i andi 2021.i NCCPLi assisti decreasedi itsi onei
ofi ai kindi recognizablei proofi numbersi supporti expensei byi 50i percent.i Otheri than,i 20i
percenti reductioni hasi beeni reportedi withini thei monthi toi monthi organizationi
conveyancei frameworki (IDS)i settledi expensei andi IDSi exchangei chargei fori CISs.i
Besides,i yearlyi capitali picki upi chargei hasi moreoveri beeni diminishedi fori littlei
neighborhoodi financiali specialists.i Eachi Brokeri mighti givei toi itsi clientsi ai obligationi
plani attachedi toi CRFi andi Sahulati Framei whichi shouldi containi alli thei datai associatedi
withi ai tariff.i Thei tariffi schedulei asi mentionedi abovei shalli bei signedi byi thei clientsi andi
alsoi thei Broker.i justi ini casei ofi anyi changei withini thei tariff,i thei Brokeri shalli
communicatei thei changei toi itsi clientsi withini seveni workingi daysi fromi thei effectivei

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datei ofi suchi change.i However,i anyi changei withini thei tariffi halli takesi effecti afteri thei
identicali isi agreedi andi dulyi signedi byi thei clientsi andi alsoi thei Broker.
Placement of Trading Orders /Instructions:
i i i i

Accordingi toi ouri research,i wei sayi thati Asi Ii havei discussedi abovei thati howi ani investori
placesi cani andi orderi toi begini trading.i Customersi shouldi deliveri ordersi /instructionsi toi
thei PSXi Brokersi asi peri thei definedi appropriatei modei ofi communicationi ini writing,i
verballyi throughi telephone/mobilei ori onlinei throughi web-basedi exchangingi
frameworksi fori eachi trade.i Customersi shouldi takei duei carei andi bei constanti whereasi
givingi arrangei instructionsi andi demonstratei clearlyi whetheri thei arrangei isi ai purchase,i
deali ori briefi deali arrange.i Thei Clienti oughti toi notei thati thei Cleari Deali (i.e.i Deali
withouti havingi Pre-Existingi Intrigued)i ati thei timei ofi settingi deali arrangei isi entirelyi
deniedi withini thei ready/regulari settlementi advertise.i Bei thati asi iti may,i suchi Blanki
Salei isi permittedi withini thei Deliverablei Prospectsi Contracti Marketi throughi
extraordinaryi arrangei F8i windowi assignedi withini thei Karachii Robotizedi Exchangingi
Frameworki (KATS)i fori Cleari Deali subjecti toi thei limits.i Furthermore,i goingi byi Clientsi
settingi verbali ordersi toi thei PSXi Brokers/Representatives/agentsi oughti toi alsoi providei
writteni acknowledgmenti ofi suchi ordersi toi thei PSXBrokers/Representatives/agents.
Online Trading:
i

Accordingi toi ouri research,i wei sayi thati everyonei cani investi andi tradei withini thei
securitiesi marketi throughi TRECi (Exchangingi Rightsi Privilegei Certificate)i holders/i
brokeragei firmsi recognizedi byi PSXi andi authorizedi byi thei Securitiesi &i Tradei
Commissioni ofi Pakistani (SECP).i Buti youi wanti toi shortlisti ai varietyi ofi brokeragei firmsi
supportedi youri personali preference.i Ini commiti toi upgradei transparency,i cultivatei
investors’i certaintyi andi minimizei thei prospecti ofi misappropriationi ofi clients’i
securities,i NCCPLi hasi createdi ai web-basedi UINi Datai Frameworki (UIS)i toi empoweri
speculatorsi toi tracei theiri exchanging,i settlementi andi relatedi data.i Thisi frameworki
empowersi UINi Holdersi toi determinei alli theiri exchanging,i settlementi andi significanti
datai withi theiri particulari brokersi ini ai veryi smoothi andi proficienti wayi throughi
committedi Clienti IDi andi Secreti word.i thei appliancei framei ofi UISi isi accessiblei oni thei
NCCPL’si ori arei ofteni gotteni straightforwardlyi fromi NCCPL’si Offices.
SMS/i E-alertsi byi NCCPLi &i CDCi fori securitiesi trade:
Ini orderi toi keepi Clientsi updatedi abouti theiri tradesi andi transactionsi ini ai quick,i simplei
andi helpfuli wayi whilei keepingi thei secrecyi ofi informationi intact,i NCCPLi givesi tradingi
datai toi Clientsi throughi SMSi and/ori maili ati dayi conclusioni fori alli exchangesi andi
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exchangesi executedi oni theiri UINi amidi thei day.i Soi also,i CDCi givesi SMSi and/ori ei
alarmsi toi Clientsi withi relevancei thei eventi ofi theiri offersi ini CDS.i Ini attempti toi
advantagei fromi suchi messages/e-alerti officesi andi toi tracei dayi byi dayi exchangesi andi
continuei recordi thereof,i Clientsi arei emphaticallyi exhortedi toi producei andi upgradei
theiri substantiali portablei numberi and/ori maili addressi ofi theiri claimi toi NCCPLi andi
CDC.
Transmission i ofi contracti notes/i tradei confirmation:
Brokersi musti providei toi itsi Clientsi ai contracti notei ini respecti toi dailyi tradesi fori thei
acquisition,i bargaini ori exchangei ofi securitiesi ofi thei Clientsi insidei 24i hoursi ofi tradei
executioni throughi ani unquestionablei modei ofi communicationi asi assignedi byi thei
Clients.i Suchi contract/tradei confirmationi notesi shouldi incorporatei alli subtlei
componentsi ofi thei tradesi furtheri asi title,i allowi numberi andi addressi ofi thei PSX.i Brokeri
furtheri becausei thei commissioni ratei andi otheri appropriatei fees/leviesi chargedi oni suchi
tradesi .i Clientsi shouldi makei surei thati theyi geti thei contracti notesi fromi PSXi Brokersi
throughi whichi theyi needi tradedi andi affirmi thati thei executedi exchangesi arei thei
identicali asi teachingi byi thei Clients.i justi ini casei ofi ai contract,i ai notei isn'ti issuedi ori iti
containsi anyi disparity,i Clienti oughti toi reporti thei identicali toi thei PSXi Brokeri interiori
onei tradingi dayi somethingi elsei thei tradei musti bei consideredi conclusivei andi definitivei
oni thei Client.i justi ini casei thei PSXi Brokeri doesn'ti adjusti thei differencei ori doesn'ti replyi
toi thei Client.i Thei Clienti shouldi immediatelyi filei ai complainti withi thei Regulatoryi
Affairsi Divisioni ofi PSXi ini writingi byi submittingi ai dulyi filledi Investors’i
Complaint/Claimi Form,i eitheri ini hardi formi ori throughi onlinei e-complaints.
The Obligation of Customers to Deposit Margins:
i i i i i i

Accordingi toi ouri research,i wei arei sayingi thati thei margini depositi isi employedi asi
collaterali oni ai financiali transactioni toi hidei somei ori alli ofi thei counteri party’si crediti
risk,i ensuringi thati thisi partyi meetsi itsi installmenti obligations.i Withini thei surfacei tradei
markets,i margini storesi arei ai extremelyi commoni componenti ini transactionsi likei
prospectsi andi forwardi contracts.i Numerousi edgei speculatorsi arei commonplacei withi
thei "schedule"i edgei call,i wherei thei brokeri inquiresi fori extrai reservesi wheni thei worthi
withini thei customer’si accounti decaysi underneathi certaini requiredi levels.i Ordinarily,i
thei brokeri willi permiti fromi twoi toi 5i daysi toi satisfyi thei decision.i Thei broker’si callsi arei
morei ofteni thani noti basedi uponi thei esteemi ofi thei accounti ati showcasei neari sincei
differenti securitiesi controlsi requirei ani end-of-dayi valuationi ofi clienti accounts.i thisi
"near"i fori manyi brokersi isi 4i p.m.i Bei thati becausei iti may,i ini volatilei markets,i ai brokeri

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mayi calculatei thei accounti esteemi ati thei neari andi theni proceedi toi calculatei callsi oni
ensuingi daysi oni ai real-timei basis.i Wheni thisi happensi thei investori mighti experiencei
somethingi likei thei following:
 Ai clienti hasi 1,000i sharesi ofi XYZi ini hisi account.i Thei closingi costi isi Rs.i 60,i
therefore,i thei marketi pricei ofi thei accounti isi Rs.60,000.i Oni thei offi chancei thati
thei broker’si valuei requirementi isi 25i percent,i thei customeri musti sustaini
Rs.15,000i ini valuei withini thei account.i withini thei eventi thati thei clienti hasi ai rarei
edgei advancei againsti thei securitiesi ofi Rs.50,000,i hisi valuei arei goingi toi bei
Rs.10,000i (Rs.60,000i -i Rs.50,000i =i Rs.10,000).i Thei brokeri decidesi thei clienti
musti geti ai edgei implyi Rs.5,000i (Rs.15,000i -i Rs.10,000i =i Rs.5,000).Ati somei
pointi earlyi withini thei dayi thei brokeri contactsi thei customeri (e.g.,i byi ani e-maili
message)i tellingi thei customeri hei hasi "x"i numberi ofi daysi toi depositi Rs.5,000i
withini thei account.i Shortlyi thereafter,i oni Dayi Two,i thei brokeri sellsi thei
customeri outi ofi thei blue.
Thei bottomi linei isi thati margini accountsi requirei worki oni behalfi ofi thei client.i
Informationi approximatelyi thei valuei ofi ai stocki isi outi therei fromi anyi numberi ofi
sources.i Infact,i numerousi investorsi checki thesei costsi oni everyi dayi byi dayi basis,i oni thei
offi chancei thati noti somei timesi everyi day.i Ai financiali specialisti isi absolvedi toi storei
extrai cashi intoi ai footingi accounti ati anyi timei ini ani attempti toi keepi upi ai strategici
distancei fromi ai footingi call.i Ini anyi case,i indeedi withini thei eventi thati extrai storesi arei
made,i ensuingi decaysi withini thei marketi pricei ofi securitiesi withini thei accounti mayi endi
ini extrai edgei calls.i withini thei eventi thati ai financiali specialisti doesn'ti justi geti toi
reservesi toi fulfilli ai call,i hei shouldi likelyi noti bei employingi ai footingi account.i Whereasi
cashi accountsi don'ti givei thei leveragei thati ai footingi accounti does,i cashi accountsi arei
simpleri toi preservei thereini theyi doi noti requirei thei carefulnessi thati ai footingi accounti
requires.i Anyi obligationi toi ai brokeri shouldi bei takeni asi genuinelyi byi ani investori asi ai
commitmenti toi ai banki ori otheri lender.i Failurei toi fulfilli commitmentsi toi ai brokeri mayi
endi ini lawfuli activityi againsti thei clienti andi cani nearlyi certainlyi causei thei brokeri toi
reporti thei defaulti toi ani informationi center.i withini thei eventi thati youi simplyi can’ti geti ai
securitiesi exchange,i whetheri youri arrangei isi puti ini ani exceedingi cashi ori edgei account,i
youi shouldi noti puti thati arrangement.i Peoplei shouldi takei ani interesti withini thei
securitiesi marketsi becausei iti werei afteri theyi havei thei monetaryi capacityi toi resisti thei
risksi andi meeti theiri obligations.i it'si imperativei thati speculatorsi takei timei toi memorizei
almosti thei risksi includedi ini exchangingi securitiesi jumpy,i andi financiali specialistsi

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shouldi counseli theiri brokersi withi relevancyi anyi concernsi theyi willi havei withi theiri
edgei accounts.
Prescribedi riski disclosurei document:
Thisi Riski Disclosurei documenti isi endorsedi byi thei Pakistani Stocki Tradei Constrainedi
(PSX)i beneathi Clausei 13(1)i ofi thei Securitiesi Brokeri (Authorizingi andi Operations)i
Controls,i 2016.i Thisi reporti containsi criticali datai relatingi toi differenti sortsi ofi dangersi
relatedi toi exchangingi andi speculationi ini budgetaryi itemsi (valuei securities,i settledi
wagei rebellious,i subsidiariesi contractsi etc.)i beingi exchangedi ati PSX.i Thei clientsi
oughti toi carefullyi studyi thisi reporti sometimei recentlyi openingi exchangingi accounti
withi ai broker.i Ini casei ai clienti enduresi negativei resultsi ori misfortunesi asi ai resulti ofi
trading/investment,i he/shei mighti bei exclusivelyi mindfuli fori thei samei andi PSXi ori
Securitiesi andi Tradei Commissioni ofi Pakistani (SECP)i shouldi noti bei heldi
responsible/liable,i ini anyi manneri ati all,i fori suchi negativei resultsi ori losses.i Thei
customersi musti acknowledgei andi accepti thati therei cani bei noi ensuredi profiti ori ensuredi
returni oni theiri investedi capitali andi underi noi circumstances,i ai brokeri cani givei clientsi
suchi guaranteei ori fixedi returni oni theiri investmenti ini viewi ofi thei facti thati thei pricesi ofi
securitiesi andi futuresi contracti cani dropi asi welli asi risei dependingi oni thei advertisei
conditionsi andi executioni ofi thei companies.i Clientsi musti geti iti thati pasti executioni isn'ti
ai directi toi futurei executioni ofi thei securities,i contractsi ori advertisei asi ai entirety.i Ini casei
thei clientsi havei anyi questioni ori arei hazyi asi toi thei risks/informationi unveiledi ini thisi
report,i PSXi unequivocallyi suggestsi thati suchi clienti oughti toi looki fori ani freei lawfuli ori
moneyi relatedi counseli ini progress.i PSXi noti onei ori thei otheri separatelyi ori togetheri andi
explicitlyi nori impliedlyi ensurei nori makei anyi representationi concerningi thei
completeness,i exactnessi andi adequacyi ofi thei datai containedi ini thisi recordi asi thisi
recordi unveilsi thei dangersi andi otheri significanti aspectsi ofi trading/investmenti ati thei
minimumi level.i PSXi doesi noti providei ori purporti toi providei anyi advicei andi shalli noti
bei liablei toi anyi personi whoi entersi intoi ai businessi relationshipi withi ai brokeri basedi oni
anyi informationi containedi ini thisi document.i Anyi informationi containedi ini thisi
documenti musti noti bei construedi asi business/investment i advicei ini anyi manneri
whatsoever.
Customersi andi stocki market
Thei customersi musti bei awarei ofi andi acquaintedi withi thei following
Risks:i
Volatilityi risk:

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Volatilityi riski isi thei riski ofi changesi withini thei valuei ofi financiali itemi ini anyi direction.i
Highi volatilityi fori thei mosti parti impliesi thati thei valuesi ofi securities/contractsi cani
undergoi dramatici upswingsi and/ori downswingsi duringi ai briefi period.i Suchi ai talli
volatilityi cani bei expectedi generallyi morei ini illiquidi ori lessi asi ofteni asi possiblei
exchangedi securities/contractsi thani ini fluidi ori morei habituallyi exchangedi one.i Duei toi
instability,i thei arrangei ofi ai clienti mayi noti bei executedi ori asi iti werei ini parti executedi
duei toi quicki alteri withini thei advertisei costs.i Suchi instabilityi cani tooi causei costi
instabilityi ofi thei showcasei ordersi asi thei costi ati whichi thei arrangei isi executedi cani bei
considerablyi distinctivei fromi thei finali accessiblei showcasei costi ori mayi alteri
essentiallyi fromi thati point,i comingi abouti ini ai reali ori notionali loss.
Liquidityi risk
Liquidityi refersi toi thei capacityi ofi marketi participantsi toi purchasei and/ori offer i
securitiesi quicklyi ati ai competitivei costi andi withi minimali costi difference.i Byi andi large,i
iti isi acceptedi thati morei thei numbersi ofi ordersi accessiblei ini market,i greateri isi thei
liquidity.i Liquidityi isi importanti sincei withi greateri liquidity,i iti isi lessi demandingi fori
clientsi toi purchasei and/ori offeri securitiesi quicklyi andi withi negligiblei costi distinctioni
and,i asi ai result,i clientsi arei morei likelyi toi payi ori geti ai competitivei costi fori theiri
executedi exchanges.i Byi andi large,i loweri liquidityi cani bei anticipatedi ini meagerlyi
exchangedi disobedienti thani ini fluidi ori morei regularlyi exchangedi ones.i Asi ai result,i
arrangei ofi clienti mayi asi iti werei bei ini parti executed,i ori mayi bei executedi withi generallyi
morei noteworthyi costi distinctioni ori mayi noti bei executedi ati all.i Beneathi certaini
showcasei conditions,i iti mayi bei troublesomei ori outlandishi fori thei clientsi toi exchangei ai
positioni withini thei showcasei ati ai sensiblei cost,i wheni therei arei noi extraordinaryi ordersi
eitheri oni thei purchase.
Speculativei tradingi risk:
Speculationi includesi tradingi ofi ai security/contract i withi thei expectationi thati it'lli gotteni
toi bei morei valuablei ini ai veryi closei future.i Thesei transactionsi arei attemptedi toi createi
benefiti fromi changesi withini thei advertisei valuei ofi securities,i insteadi ofi cruciali valuei
ofi ai securityi and/ori fundamentali attributesi embodiedi withini thei securitiesi suchi asi
dividends,i rewardi ori anyi otheri factor(s)i materiallyi influencingi thei price.i Speculativei
tradingi resultsi ini ani uncertaini degreei ofi gaini ori misfortune.i Nearlyi alli investmenti
activitiesi includei speculativei risksi toi somei extent,i asi ai clienti hasi noi thoughti whetheri
ani venturei willi bei ai blazingi successi ori ani expressi disappointment.i Dayi exchangingi
procedurei mayi bei ai commoni casei ofi theoreticali tradingi ini whichi customersi buyi andi

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offeri thei samei security/derivativei insidei thei samei day,i suchi thati alli commitmentsi arei
gotteni offi andi closedi andi noi settlementi commitmentsi stand.i Thei clienti revelingi ini ai
day-tradingi techniquei hasi toi bei morei watchfuli andi educatedi thani thei clientsi
contributing.i Thei customeri indulgingi ini ai day-tradingi strategyi needsi toi bei morei
vigilanti andi informedi thani thei customersi investingi fori ai longeri period,i asi marketi mayi
noti movei duringi thei dayi asi thei day-traderi originallyi anticipated,i resultingi ini ai lossi toi
them.
Pricei fluctuationi risk
Thei corporatei declarationsi byi thei issuersi fori thei corporatei activitiesi ori anyi otheri
materiali informationi mayi influencei thei pricei ofi thei securities.i Thesei declarationsi
combinedi withi moderatelyi loweri liquidityi ofi thei securityi mayi resulti ini significanti costi
volatility.i Thei clients,i whereasi makingi anyi speculationi choicei ini suchi
securities/contracts,i arei promptedi toi requirei intoi considerationi suchi declarations.i
Additionally,i thei clientsi oughti toi bei cautiousi andi carefuli ini casei fakei rumorsi arei
circulatingi withini thei advertise.i Thei Clientsi arei promptedi toi abstaini fromi actingi
absolutelyi basedi oni suchi rumorsi ori maybei takei welli educatedi speculationi choicei ini
lighti ofi alli actualitiesi andi circumstancesi relatedi withi suchi securitiesi andi theiri
guarantors.
Systemi risk:
Highi volumei tradingi willi frequentlyi happeni ati thei marketi openingi andi sometimei
recentlyi marketi close.i Suchi highi volumesi mayi tooi happeni ati anyi pointi withini thei dayi
causingi delayi ini arrangei executioni ori confirmation.i Duringi periodsi ofi instability,i oni
accounti ofi advertisei membersi persistentlyi alteringi theiri arrangei amounti ori costsi ori
settingi newi orders,i therei mayi bei delaysi ini arrangei executioni andi itsi confirmations.
Modes of Payments /Receipts:
i i i

Agreeingi toi ouri re-search,i wei sayi thati clientsi arei requiredi toi geti alli PSXi Brokersi
exchangesi ini theiri possessi titlei asi iti werei throughi crossedi chequesi /i banki draftsi /i payi
ordersi ori anyi otheri managingi ani accounti channels.i Clientsi oughti toi makei installmentsi
toi PSXi Brokersi byi meansi ofi "Ai /i ci Payeei Asi iti were"i crossedi cheque,i banki drafts,i
installmenti ordersi ori otheri managingi ani accounti channelsi drawni oni theiri claimi banki
accounti andi geti theiri receipt.i Ini casei ofi cashi installmenti (permittedi greatesti upi toi
Rs25,000),i Clientsi oughti toi geti appropriatei receipti particularlyi sayingi ini thei eventi thati
installmenti isi fori edgei ori thei buyi ofi securities.i Ini anyi case,i PSXi Brokersi mayi
acknowledgei cashi fromi Clientsi ini abundancei ofi Rs25,000i ini remarkablei

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circumstancesi wherei iti getsi toi bei essentiali fori themi toi doi soi onlyi throughi storei withini
thei PSXi Broker’si banki accounti assignedi fori clients.i Thei Brokersi arei requiredi toi reporti
suchi exceptionali occurrencesi withi rationalei thereofi toi PSXi insidei onei tradingi dayi
throughi prescribedi reportingi mechanism.

Right to obtain ledger details showing cash and securities positions:

i i i i i i i i i

i Accordingi toi ouri re-search,i wei sayi thati ai stocki ledgeri listsi alli share-relatedi exchangesi
fori ai company.i Iti statesi thei titlei ofi thei owneri ofi eachi piecei ofi offers,i asi welli asi thei
numberi ofi sharesi claimedi byi eachi financiali specialist,i thei sorti ofi sharesi purchased,i
andi thei datei ofi eachi buyi andi thei sumi paid.i Thei corporatei secretaryi keepsi iti up-to-datei
byi adjustingi iti fori alli stocki dealsi andi buys.i Youri Recordi Accounti appearsi alli
exchangesi drainedi youri exchangingi account,i Iti incorporatesi Crediti ofi Reserves,i
Chargei ofi reserves,i outlinei ofi offersi boughti andi sold,i Moreoveri iti tooi appearsi alli thei
otheri chargesi exactedi byi youri brokeri ini youri tradingi account.i Iti isi thei correcti ofi clienti
toi geti ai duplicatei ofi recordi explanationi indicatingi cashi andi portfolioi positionsi ofi theiri
accounti openedi andi kepti upi withi thei PSXi Brokeri beneathi officiali seali andi signaturei ofi
thei PSXi Brokeri ori itsi authorizedi representativei oni occasionali premise.i Ini casei ofi anyi
inconsistencyi withini thei recordi statementsi customersi arei requiredi toi informi thei samei
toi thei PSXi Brokeri withini onei (1)i tradingi dayi ofi receipti ofi thei ledgeri statementi toi
removei suchi discrepancy.i Ini casei ofi non-resolutioni ofi anyi discrepancy,i thei Customersi
shouldi reporti toi thei PSX.i Thei namei ofi authorizedi representativei ofi PSXi Brokeri isi
displayedi ati thei entrancei ofi itsi branches/offices.i
Mandatory Provision of Quarterly Account Statements by SE
i i i i i i i i

Brokers:
Accordingi toi ouri re-search,i wei sayi thati everyi Brokeri shalli providei withini 15i workingi
daysi ofi endi ofi eachi quarteri ai quarterlyi accounti statementi toi eachi ofi itsi clientsi throughi
acceptablei modei ofi communicationi asi providedi underi Standardizedi Accounti Openingi
Formi prescribedi underi chapteri 4i ofi PSXi Regulations.i Thei statementi musti includei interi
aliai thei followingi informationi fori thei reportingi period:
 Cashi ledgeri statementi showingi openingi andi closingi cashi balances;i alli receiptsi
andi paymentsi ofi moneyi andi settlement-wisei moneyi obligationi debitedi ori
creditedi toi thei clienti account

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 Securitiesi positionsi asi peri backi officei recordi ofi thei Brokeri showingi statusi ofi
availablei andi pledgedi securitiesi andi reconciliationi fori anyi differencesi betweeni
backi officei recordi andi CDSi record.
 Securitiesi positionsi asi peri CDSi record.
Whereas;i customersi musti obtain,i readi andi verifyi thei quarterlyi statementsi providedi byi
thei PSXi Brokeri toi ensurei thati thei samei reflecti thei truei positioni ofi cashi andi securitiesi
asi peri thei clients’i orderi instructionsi giveni toi thei PSXi Brokersi duringi thei quarter.i Ini
casei ofi anyi discrepancy,i thei Customeri musti reporti toi PSXi Brokeri fori removali ofi thei
discrepancyi andi alsoi informi thei samei toi PSX.i Ini casei ofi noncooperationi ori non-
resolutioni ofi thei issue,i thei Customeri musti filei ai complainti withi Regulatoryi Affairsi
Divisioni ofi PSXi ini writingi byi submittingi ai dulyi filledi Investors’i Complaint/Claimi
Form,i eitheri ini hardi formi ori throughi onlinei e-complaints.
Prescribed Risk Disclosure Document:
i i i

Accordingi toi ouri re-search,i wei sayi thati thei Riski Disclosurei documenti isi prescribedi byi
thei Pakistani Stocki Exchangei Limitedi (PSX)i underi Clausei 13(1)i ofi thei Securitiesi
Brokeri (Licensingi andi Operations)i Regulations,i 2016.i Thisi documenti containsi
importanti informationi relatingi toi variousi typesi ofi risksi associatedi withi tradingi andi
investmenti ini financiali productsi (equityi securities,i fixedi incomei instruments,i
derivativesi contractsi etc.)i beingi tradedi ati PSX.i Thei customersi shouldi carefullyi readi
thisi documenti beforei openingi tradingi accounti withi ai broker.i Ini casei ai customeri suffersi
negativei consequencesi ori lossesi asi ai resulti ofi trading/investment,i he/shei shalli bei
solelyi responsiblei fori thei samei andi PSXi ori Securitiesi andi Exchangei Commissioni ofi
Pakistani (SECP)i shalli noti bei heldi responsible/liable,i ini anyi manneri whatsoever,i fori
suchi negativei consequencesi ori losses.i Thei customersi musti acknowledgei andi accepti
thati therei cani bei noi guaranteedi profiti ori guaranteedi returni oni theiri investedi capitali andi
underi noi circumstancesi ai brokeri cani providei customersi suchi guaranteei ori fixedi returni
oni theiri investmenti ini viewi ofi thei facti thati thei pricesi ofi securitiesi andi futuresi contracti
cani falli asi welli asi risei dependingi oni thei marketi conditionsi andi performancei ofi thei
companies.i Customersi musti understandi thati pasti performancei isi noti ai guidei toi futurei
performancei ofi thei securities,i contractsi ori marketi asi ai whole.i Ini casei thei customersi
havei anyi doubti ori arei uncleari asi toi thei risks/informationi disclosedi ini thisi document,i
PSXi stronglyi recommendsi thati suchi customeri shouldi seeki ani independenti legali ori
financiali advicei ini advance.i PSXi neitheri singlyi ori jointlyi andi expresslyi nori impliedlyi
guaranteei nori makei anyi representationi concerningi thei completeness,i accuracyi andi

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adequacyi ofi thei informationi containedi ini thisi documenti asi thisi documenti disclosesi thei
risksi andi otheri significanti aspectsi ofi trading/investment i ati thei minimumi level.i PSXi
doesi noti providei ori purporti toi providei anyi advicei andi shalli noti bei liablei toi anyi personi
whoi entersi intoi ai businessi relationshipi withi ai brokeri basedi oni anyi informationi
containedi ini thisi document.i Anyi informationi containedi ini thisi documenti musti noti bei
construedi asi business/investmenti advicei ini anyi manneri whatsoeveri customersi shouldi
carefullyi readi andi understandi thei Riski Disclosurei Documenti fori theiri owni interestsi
priori toi commencingi businessi withi PSXi Brokers.i Toi facilitatei Customersi ini
understandingi thei risksi andi makingi welli informedi investmenti decisionsi ini lighti ofi
theiri financiali situationi andi investmenti objectivesi PSXi hasi formulatedi ai specimeni ofi ai
Riski Disclosurei Documenti asi requiredi underi Clausei 13(1)i ofi thei Securitiesi Brokersi
(Licensingi andi Operations)i Regulations,i 2016.i Thei Riski Disclosurei Documenti
providesi informationi abouti thei variousi risksi associatedi withi tradingi andi investmenti ini
financiali instrumentsi beingi tradedi ati PSX.i PSXi Brokersi musti providei thei Riski
Disclosurei Documenti toi theiri everyi newi Customeri andi obtaini ani undertakingi dulyi
signedi andi datedi byi thei Customersi confirmingi thati theyi havei understoodi thei naturei
andi contentsi ofi thei Riski Disclosurei Document.

Initial Public Offerings:

i i

Accordingi toi ouri re-search,i wei sayi thati thei processi ofi sharesi ofi ai privatei organizationi
beingi offeredi toi thei publici ini thei issuancei ofi ai newi stocki fori thei firsti timei isi knowni asi
Ani Initiali Publici Offeringi (IPO).i Thesei publici sharesi thati arei beingi issuedi fori thei
privatei organizationi willi helpi thisi organizationi ini raisingi capitali fromi publici investors.i
Asi thesei privatei companiesi becomesi public,i iti cani bei ani importanti timei fori privatei
investorsi ofi thesei organizationsi toi fullyi realizei gainsi fromi theiri investmenti becausei
thesei sharesi typicallyi includesi premiumsi fori currenti privatei investors.i Onei ori morei
thani onei underwritersi arei typicallyi selectedi byi thei companyi planningi ani initiali publici
offering.i Thesei underwritersi willi alsoi choosei ani exchangei ini whichi sharesi willi bei
issuedi andi subsequentlyi tradedi publicly.
Whyi listi oni thei Stocki Exchange?
Wheni ai privatei companyi decidesi toi goi publici andi listsi itsi securitiesi oni stocki
exchange,i thei publici startsi investingi ini thei newlyi issuesi sharesi ofi thei companyi andi thei
moneyi paidi byi themi goesi directlyi toi thei companyi calledi primaryi offering.i Thei earlyi
privatei investorsi alsoi decidei toi selli alli ofi theiri holdingsi ori ai portioni ofi theiri holdingsi

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knowni asi secondaryi offerings.i Bothi primaryi offeringi andi secondaryi offeringi becomesi
asi ai parti ofi IPO.i Therefore,i ani initiali publici offeringi allowsi ani organizationi toi gaini ai
widei pooli ofi potentiali investorsi thati helpsi thisi organizationi toi providei itselfi withi
capitali largei enoughi fori futurei growth,i repaymenti ofi debt,i ori workingi capital.i Iti isi
neveri requiredi byi ai corporationi thati isi sellingi commoni sharesi toi reimbursei thei publici
investors.i Thesei publici investorsi musti toleratei andi understandi thei impulsivei naturei ofi
thei openi marketi toi decidei wheni toi tradei theiri sharesi andi oni whati pricei thei tradei shouldi
takei place.i Afteri thei initiali publici offeringsi isi completed,i thei organizationi havei thei
capitali thati wasi offeredi byi thei investorsi ini thei facei ofi sharesi andi wheni thei sharesi arei
tradedi freelyi ini stocki exchangei iti doesi noti effectsi thei organization,i thei moneyi justi
passesi betweeni thei publici investors.i Thei earlyi privatei investorsi whoi decidedi toi selli
theiri sharesi ini thei processi ofi thei IPO,i thei IPOi givesi ani opportunityi toi monetizei thei
investmenti ofi thesei privatei investors.i Oncei thei sharesi startsi toi tradei ini thei stocki
market,i thosei investorsi whoi holdi ai largei quantityi ofi sharesi cani eitheri selli thesei sharesi
ini piecesi ini thei stocki marketi ori selli ai largei amounti ati oncei directlyi toi thei public,i ati ai
fixedi price.i Thisi processi isi donei throughi thei Secondaryi Marketi Offering.i Thei
Secondaryi Marketi Offeringi isi noti dilutivei asi therei arei noi newi sharesi thati arei beingi
created.
Afteri thei privatei companyi nowi becomesi ai publici companyi andi isi listedi ini thei stocki
exchange,i thisi companyi cani nowi issuei additionali commoni sharesi ini variousi ways. i
Onei ofi thesei variousi waysi isi thei follow-oni offering.i Thisi isi ai methodi whichi providesi
capitali fori severali organizationali commitmentsi throughi thei issuancei ofi equityi withouti
thei occurrencei ofi anyi debt.i Thisi capabilityi toi rapidlyi increasei enormousi amountsi ofi
capitali fromi stocki marketi isi thei corei reasoni whyi companiesi seeki toi goi publici listi theiri
initiali publici offeringsi ini stocki market.
Reasonsi toi doi ani IPOi (Initiali Publici Offering:
Thei maini purposei ofi ai privatei organizationi toi goi publici andi theni doi IPOi isi toi increasei
moneyi fori thei company.i Asi thisi isi thei mosti separatei benefiti ofi initiali publici offerings,i
iti isi noti thei onlyi reasoni whyi companiesi choosei toi goi public.i Thei companyi cani
increasei itsi publici awarenessi andi asi thei productsi ofi thisi companyi gaini morei publicityi
byi gettingi recognitioni toi ai newi groupi ofi potentiali customers.i Asi ai result,i thisi willi
eventuallyi leadi ini increasei ofi thei marketi sharei ofi thati companyi asi welli asi increasei ini
itsi prestigei andi publici imagei thati resultsi ini morei salesi andi profit.i Ai privatei companyi
havei lessi transparencyi wheni comparedi toi ai publici company,i whichi comesi withi thei

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quarteri yeari reportsi requiredi byi thei publici companyi toi publish,i resultingi ini morei
favorablei crediti borrowingi termsi fori thei publici company.i Ai publici companyi cani easilyi
facilitatei acquisitioni dealsi andi alsoi easilyi createi thei worthi ofi ani procurementi marki asi
thisi companyi hasi registeredi itsi sharesi publicly.i Initiali publici offeringsi alsoi leadi ai
companyi toi havei lesseri pricei ofi wealthi fori bothi equityi andi liability.i Otheri thani thisi iti
isi easieri fori ai publici companyi toi increasei morei fundsi ini thei futurei byi secondaryi
offeringsi asi thisi companyi alreadyi havei accessi toi thei stocki exchangei throughi thei initiali
publici offering.i Ai publici companyi cani easilyi enticei andi keepi morei skilledi
administrationi andi staffsi fromi sidei toi sidei liquidi equityi contribution.i Throughi stocki
compensationi ati initiali publici offering,i manyi organizationsi havei alreadyi compensatei
executivesi ori otheri employees.
What are the requirements for an Initial Public Offering?
i i i i i i i i i

Accordingi toi ouri re-search,i wei sayi thati thesei arei thei generali requirementsi fori initiali
publici offeringi ofi securitiesi ofi Pakistani Stocki Exchange.i ai companyi cani onlyi makei
publici offeri ofi securitiesi ifi iti fulfillsi thei followingi generali conditions:
Ai largei enterprisei shouldi havei minimumi post-issuei paidi upi capitali ofi 200i Millioni
Pakistanii Rupeesi andi ai Small-Mediumi enterprisei shouldi havei post-issuei paidi upi
capitali betweeni 25i Millioni toi 200i Millioni Pakistanii Rupees.
 Thei companyi shouldi preparei periodici financiali statements.
 Thei companyi musti auditi statementsi byi qualityi controli reviewi ratedi chartedi
accountants.
 Thei companyi shouldi publishi itsi financiali statementsi oni thei company’si owni
website.
 Thei companyi musti havei ai websitei withi basici businessi information.
 Thei companyi musti containi ai prospectusi andi posti iti oni itsi website.
 Thei companyi shouldi posti annual,i half-year,i ori quarterlyi accounts.
 Thei companyi shouldi ini businessi fori ati leasti threei years.
 Thei companyi musti bei profitablei fori ati leasti twoi precedingi yearsi beforei gettingi
listed.
Otheri thani thesei requirementsi therei isi ani initiali catalogi paymenti whichi isi 1/10i ofi 1%i
ofi Paidi upi Capitali andi cappedi ati 1.5i millioni Pakistanii Rupees.
What are the procedures of an Initial Public Offering?
i i i i i i i i i

Accordingi toi ouri re-search,i wei sayi thati ani IPOi comprehensivelyi comprisesi ofi twoi
parts.i Thei primaryi isi thei pre-marketingi stagei ofi thei offering,i whereasi thei momenti isi
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thei introductoryi openi advertisingi itself.i Wheni ai companyi isi fascinatedi byi ani IPOi andi
it'lli promotei toi guarantorsi byi requestingi privatei offersi ori iti cani tooi makei ai openi
articulationi toi producei intrigued.i Thei guarantorsi leadi thei IPOi handlei andi arei choseni
byi thei company.i Ai companyi mayi selecti onei ori ai fewi guarantorsi toi overseei diversei
partsi ofi thei IPOi handlei collaboratively.i Thei guarantorsi arei includedi ini eachi viewpointi
ofi thei IPOi duei constancy,i archivei arrangement,i recording,i promoting,i andi issuance.
Stepsi toi ani IPOi includei thei following:i

 Underwritersi presenti proposalsi andi valuationsi talkingi abouti theiri services,i thei
besti typei ofi securityi toi issue,i advertisingi cost,i amounti ofi shares,i andi estimatedi
timei outlinei fori thei marketi offering.
 Thei companyi choosesi itsi underwritersi andi formallyi agreesi toi endorsingi termsi
throughi ai guaranteeingi agreement.
 IPOi groupsi arei formedi comprisingi guarantors,i lawyers,i certifiedi openi
accountants,i andi Securitiesi andi Tradei Commissioni experts.
 Informationi withi respecti toi thei companyi isi compiledi fori requiredi IPOi
documentation.i
 Marketingi materialsi arei madei fori pre-marketingi ofi thei unusedi stocki issuance.i
 Formi ai boardi ofi directors.i
 Ensurei formsi fori announcingi audit-ablei monetaryi andi bookkeepingi datai eachi
quarter.i
 Thei companyi issuesi itsi offersi oni ani IPOi date.i
 Somei post-IPOi arrangementsi mayi bei instituted.

Toi bei listedi oni thei Stocki Exchange,i thei companyi musti meeti alli thei requirementsi toi
enteri thei market,i particularlyi thei conditioni relatedi toi thei distributioni ofi securitiesi toi
thei public.i Thei initiali publici offeringi isi accomplishedi ini twoi continuousi phases:i

 i Allocatingi thei securitiesi toi thei marketi andi

 i Organizingi thei firsti listingi accordingi toi onei ofi thei fouri proceduresi below.
 1.Thei techniquesi ofi distributioni ofi securities:
Twoi techniquesi ofi investmenti ofi securitiesi arei usedi
 Thei guaranteedi investmenti ofi securitiesi byi institutionali investors:
Centralizationi isi carriedi outi withi thei leadingi institutioni ofi thei investmenti
union.i Valuesi arei assignedi ati thei discretioni ofi thei leader.

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 Thei distributioni toi thei widei public:

Thisi distributioni isi centralizedi byi thei Stocki Market.i Valuesi arei assignedi
accordingi toi thei criteriai announcedi ini advancei (distributioni method,i
categories,i etc.)i andi distributioni ofi securitiesi toi thei publici isi carriedi outi byi
banksi andi stockbrokers.i Iti isi carriedi outi throughi onei ofi thei followingi
procedures:i directi registrationi procedure,i minimumi pricei offer,i fixedi pricei
offeri andi openi pricei offer.
 2.i Directi registrationi procedurei
Thei sharesi ofi thei companyi arei registeredi directlyi ini thei stocki marketi pricei fori
itsi commercialization.i Thisi procedurei isi alsoi used,i ati thei requesti ofi thei
companyi fori itsi directi registrationi ini thei alternativei market,i wheni 20%i ofi itsi
capitali isi heldi fori morei thani ai yeari byi twoi ori morei institutionali investors.
 3.i Fixedi pricei Offeri procedure
Alli ori parti ofi thei capitali ofi thei companyi isi madei ati ai statici feei offeredi toi thei
communityi oni thei dayi ofi thei Initiali Publici Offeringi andi fixedi pricei offeri
procedurei appliesi wheni company'si capitali isi offeredi toi public.
 4.i Openi Pricei Offeri Procedurei
Thei openi pricei offeringi procedurei consistsi ini makingi ai certaini numberi ofi
securitiesi availablei toi thei publici byi settingi ai pricei range.i Generally,i thei openi
pricei offeri procedurei isi accompaniedi byi ai guaranteedi investment.i Thei marketi
pricei isi fixedi ati thei endi ofi thei offeri andi takesi intoi accounti thei finali pricei ofi thei
guaranteedi investment
 5.i Minimumi pricei offeri procedure
Iti isi ai techniquei similari toi thei publici sale.i Iti allowsi thei shareholdersi ofi thei
companyi toi makei availablei toi thei marketi oni thei dayi ofi thei initiali publici
offering,i ai certaini numberi ofi sharesi fori salei ati ai minimumi price.i Thei purchasei
ordersi issuedi byi thei investorsi arei centralizedi byi thei Stocki Exchange,i whichi
fixesi thei pricei byi whichi alli thei ordersi willi bei executed.

Who does an Initial Public Offering?

i i i i i ii

i Accordingi toi ouri re-search,i wei sayi thati Firsti Communali Subscriptioni includesi severali
financiali professionalsi andi specialistsi ofi thei companyi toi doi thei stepsi thati arei includedi
ini thei process.i Thei individualsi responsiblei fori thei initiali communityi offeringsi arei thei
auditorsi ofi thei companyi andi thei legali advisors.i Ai companyi alsoi hiresi ai stocki brokeri

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andi designatesi listingi sponsori toi doi thei proceduresi fori thei companyi toi goi publici andi
afteri thati doi initiali publici offerings.i Thei auditorsi andi lawfuli advisorsi arei includedi ini
certifyingi ofi alli thei moneyi relatedi articulationsi ofi thei pasti ai longi timei somei timei
recentlyi thei proceedingi ofi introductoryi openi advertising.i Theyi moreoveri offeri
assistancei withini thei introductoryi modificationsi requiredi fori startingi openi advertisingi
conjointlyi thei legitimatei changesi thati arei obligatoryi toi doi somei timei recentlyi startingi
openi advertising.i Otheri thani thei revieweri andi thei lawfuli advisors,i thei companyi tooi
enlistsi ai stocki brokeri whosei obligationi isi toi performi thesei errands:
1)i Toi makei thei assessmenti ofi thei companyi
2)i Toi storei thei recordi ofi confirmationi fori thei companyi withini thei stocki exchange,
3)i Toi executei thei calendari ofi operations,i
4)i Toi plani thei postingi plani ofi thei companyi thati willi bei submittedi toi thei moneyi relatedi
showcasei council.i
5)i Toi conveyi thei securitiesi ofi thei companyi toi thei openi agreeingi toi onei ofi thei startingi
openi advertisingi procedures,
6) Andi toi overseei thei liquidityi contract.
Thei companyi alsoi appointsi itsi listingi sponsori whoi isi ini chargei of:i
 Thei administrationi ofi thei beginningi openi advertisingi operation.i
 Accompaniment i alli throughi thei postingi periodi ofi thei securitiesi ofi thei
company.i
 Andi helpingi thei companyi toi meeti legali andi administrativei requirementsi ofi thei
market.i Inter-mediationi companiesi oni thei stocki market,i crediti institutions,i
workplacesi ori tradei specializedi ini bookkeeping,i backi ori lawi makesi ai
differencei ini conductingi thei movementi ofi thei postingi sponsor.
Otheri thani alli thei individualsi includedi withini thei companyi therei arei ai fewi
responsibilitiesi ofi thei stocki tradei thei companyi isi registeringi ini asi well.i Thesei arei
reviewingi thei confirmationi recordi submittedi byi thei stocki broker,i centralizingi thei
orders,i apportioningi thei securitiesi ofi thei company,i distributingi thei comesi abouti ofi
openi offerings,i andi organizingi postingi ofi securities.i Thei qualityi ofi thei datai isi
additionallyi confirmedi byi thei monetaryi advertisei committeei andi thei supervisoryi
specialisti somei timei recentlyi thei dischargingi iti toi publici amidi thei introductoryi openi
advertising.i Thisi cani bei exceptionallyi imperativei sincei withouti iti thei startingi openi
advertisingi cannoti takei put.i There'si moreoveri ai centrali depositoryi whichi takesi dutyi ofi
thei securitiesi ofi thei companyi somei timei recentlyi thei dayi ofi introductoryi openi

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advertisingi conjointlyi shieldsi thei clearancei andi disseminationi ofi securitiesi afteri theiri
beginningi citation.
References:
www.psx.com
www.scstrade.com
www.investopedia.com

Date
4/9/2020