The Pakistan Stock Exchange (PSX), founded as Karachi Stock Exchange (KSE), is a
stock exchange
A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for ...
based in
Karachi
Karachi is the capital city of the Administrative units of Pakistan, province of Sindh, Pakistan. It is the List of cities in Pakistan by population, largest city in Pakistan and 12th List of largest cities, largest in the world, with a popul ...
,
Pakistan
Pakistan, officially the Islamic Republic of Pakistan, is a country in South Asia. It is the List of countries and dependencies by population, fifth-most populous country, with a population of over 241.5 million, having the Islam by country# ...
. PSX was classified by
MSCI as a
frontier market on 8 September 2021.
Pakistan Stock Exchange was founded in 1947 as Karachi Stock Exchange, In January 2016, Karachi Stock Exchange was renamed as Pakistan Stock Exchange after the merger of the
Lahore Stock Exchange and
Islamabad Stock Exchange.
Investors on the exchanges include 1,886
foreign institutional investors and 883 domestic institutional investors along with about 220,000 retail investors. There are also about 400 brokerage houses which are members of the PSX as well as 21 asset management companies. As of year-end 2024, PSX has a total of 525 listed companies with a total market capitalization of 14.495 trillion PKR.
History
1947–2016: Karachi Stock Exchange
Founded on 18 September 1947, Karachi Stock Exchange Limited (KSE) was registered in
Pakistan
Pakistan, officially the Islamic Republic of Pakistan, is a country in South Asia. It is the List of countries and dependencies by population, fifth-most populous country, with a population of over 241.5 million, having the Islam by country# ...
. It was located at the Stock Exchange Building (SEB) on Stock Exchange Road, in the heart of
Karachi
Karachi is the capital city of the Administrative units of Pakistan, province of Sindh, Pakistan. It is the List of cities in Pakistan by population, largest city in Pakistan and 12th List of largest cities, largest in the world, with a popul ...
's business district off
I. I. Chundrigar Road (then known as McLeod Rd). Since its establishment, the number of members at the KSE had been capped at 200, with each member possessing a trading card.
The value of these cards had experienced volatility, rising from slightly more than one million rupees before 1990 to approximately 40 million rupees in the mid-1990s, before settling at around 27.5 million rupees in 2002.
From its founding up until May 27, 1998, the Karachi Stock Exchange (KSE) trading hall was characterized by the vocal trading cries of "La-oo" from buyers and "Lay" from sellers, a method known as
open outcry.
The advent of foreign investors in the early 1990s catalyzed a push for modernization, supported by a $125 million loan from the
Asian Development Bank
The Asian Development Bank (ADB) is a regional development bank to promote social and economic development in Asia. The bank is headquartered in Metro Manila, Philippines and maintains 31 field offices around the world.
The bank was establishe ...
for
capital market reforms.
This led to the replacement of the traditional open outcry system with the automated Karachi Automated Trading System (KATS).
Securities and Exchange Commission of Pakistan was founded in 1999 with the aim to reform the
capital markets. Khalid Mirza was appointed as SECP Chairman in March 2000.
Upon taking office, Mirza found the Karachi Stock Exchange characterized by extensive
market manipulation and unethical practices.
Despite a
market capitalization
Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's outstanding common shares owned by stockholders.
Market capitalization is equal to the market price per common share multiplied by ...
of only $6 billion, it exhibited extreme
volatility and high turnover, with trading concentrated in just 30 of the 765 listed stocks.
Malpractices such as fund diversion, absence of margin requirements, and
predatory lending were common, disadvantaging small investors.
Commercial bank
A commercial bank is a financial institution that accepts deposits from the public and gives loans for the purposes of consumption and investment to make a profit.
It can also refer to a bank or a division of a larger bank that deals with whol ...
s were involved in lending to brokers who engaged in exploitative practices like "cornering."
Shareholder meetings were often delayed or not held, and there was a trend of companies delisting and liquidating assets, contributing to economic decline.
His efforts to reform the capital markets faced significant resistance, including public protests from stock exchange brokers who labeled him an "American agent."
Despite efforts to clean up the market, significant issues persisted.
Manipulation continued, and brokers maintained substantial influence over the exchange, controlling 60 percent of its
board of directors
A board of directors is a governing body that supervises the activities of a business, a nonprofit organization, or a government agency.
The powers, duties, and responsibilities of a board of directors are determined by government regulatio ...
even after new SECP regulations aimed to limit their management role.
The SECP was granted authority to regulate accountants, but penalties for misconduct remained minimal, at $30 per offense.
Mirza and his team faced entrenched vested interests resistant to reform, and challenges in enforcing
transparency and
accountability
In ethics and governance, accountability is equated with answerability, culpability, liability, and the expectation of account-giving.
As in an aspect of governance, it has been central to discussions related to problems in the public secto ...
in Pakistan's financial markets continued.
On December 14, 1999, the SECP issued the Companies (Buy-back of Shares) Rules, 1999, which established detailed regulations and procedures for corporate share repurchases, commonly known as
treasury stock. In 2002, Alhamd Textile Mills, a textile company based in
Multan
Multan is the List of cities in Punjab, Pakistan by population, fifth-most populous city in the Punjab, Pakistan, Punjab province of Pakistan. Located along the eastern bank of the Chenab River, it is the List of cities in Pakistan by populatio ...
, became the first company in the history of stock exchange to buy back shares from its shareholders under these new regulations.
2016–present: Pakistan Stock Exchange
The Pakistan Stock Exchange (PSX) came into existence in January 2016 when the
Government of Pakistan
The Government of Pakistan () (abbreviated as GoP), constitutionally known as the Federal Government, commonly known as the Centre, is the national authority of the Islamic Republic of Pakistan, a federal republic located in South Asia, con ...
decided to merge the three large exchange markets of the country (based in Karachi, Lahore, and Islamabad) into one combined market. The PSX was launched on 11 January 2016. Prior to the formal launch, the Karachi Stock Exchange held a two-day pre-production mock trading session for all certificate holders of the three exchanges. The integration is expected to help reduce market fragmentation and create a strong case for attracting strategic partnerships necessary for providing technological expertise and assistance. The integration of the three exchanges has completed the second phase of the Stock Exchanges Demutualization and Integration Act 2012, passed by a
joint session of the
Parliament
In modern politics and history, a parliament is a legislative body of government. Generally, a modern parliament has three functions: Representation (politics), representing the Election#Suffrage, electorate, making laws, and overseeing ...
.
The
Shanghai Stock Exchange became a major shareholder with a 40% stake in the PSX.
PSX is integrated with China's stock market through the China Connect Interface, allowing Chinese investors to more easily enter Pakistan's stock markets.
Indexes
*
KSE 100 Index
The KSE-100 Index is a total return stock index acting as a benchmark to compare prices on the Pakistan Stock Exchange (PSX) over a period.
In determining representative companies to compute the index on, companies with the highest market ca ...
*
KSE-30 Index
*
KMI 30 Index
Associate companies
Notable companies in which PSX owns
controlling or significant
minority stakes include:
*
National Clearing Company of Pakistan (49.71%)
*
Central Depository Company (39.81%)
*
Pakistan Mercantile Exchange (28.41%)
* E-Clear (25%)
* VIS Credit Rating (12.50%)
References
External links
Official websiteData portal
{{authority control
Economy of Pakistan
Stock exchanges in Pakistan
Companies listed on the Pakistan Stock Exchange
2016 establishments in Pakistan
Financial services companies established in 2016
2016 mergers and acquisitions
Formerly government-owned companies of Pakistan
Pakistani subsidiaries of foreign companies