A stock exchange is a facility where stock brokers can buy and sell securities like stocks and bonds. There is a standardized trading procedure involving brokers, clients, and market makers. Brokers act as intermediaries between clients and market makers, preparing contract notes with transaction details. Settlement of ready delivery contracts is same-day, while forward contracts settle weekly or monthly. Stock exchanges help raise capital, mobilize savings, facilitate company growth, and provide investment opportunities. Stock prices fluctuate based on company performance, financial results, product launches, and market expectations. The selection process for the KSE 100 index considers the largest market capitalizations in each sector and remaining companies by capitalization. Listing applications must include documents like certificates of incorporation, aud

1. STOCK EXCHANGE WORKING
MECHANISM

2. Ahsan ALI
BBA-16-001
Presentation by:

4. STOCK EXCHANGE
 A facility where stock brokers and traders can
buy and sell securities, such
as shares of stock and bonds and other
financial instruments.

6. Trading Procedure on Stock
Exchange
1) Selection of Broker:
Abroker is amember of stock exchange and securities canonly
be purchased and sold through him
2) Placing the Order:
There are three parties involved in the dealing ofshares:
 Thestock Broker
 Theclient
 Thejobber (market maker)
Thestock broker simply acts asagent and contacts the
particular jobber in the stock exchange on behalf of the
client

7.  3) Preparing the contract note:
The stock broker prepares the contact note that contains the
following information:
 Name and the address of the stockbroker
 The name and address of the jobber
 The type and price of the share
 The commission of the broker
 The date of transaction
 4) Settlement:
 In case of ready delivery contract, the buyer pays the money
andthe seller delivers the securities one sameday
 In the case of forward delivery contract settlement are done ina
week or once in amonth.

8. ROLES OF STOCK
EXCHANGES
 Raising capital for businesses.
 Mobilizing savings for investment.
 Facilitating company growth.
 Opportunities for small investors.

9. Stock prices up and down
 Company doing good or bad business
 Financial results and bright or depressive
expectations
 Players go for buying seeing rapid growth
or selling anticipating depressed earnings
 New innovative product launched

10. Selection 100 KSE index
 The selection criteria for stock inclusion in the
recomposed KSE 100 Index are:
 SECTOR RULE
 Largest market capitalization in each of the 34
sector of the Exchange, excluding Open – end
Mutual Fund sector;
 CAPITALIZATION RULE
 The remaining 66 companies are taken up on the
basis of market capitalization

11. Process to list company
 The application for listing shall be made
accompanied by the documents as mentioned
in
 The Board may require additional evidence
declarations, affirmations and information
 If an application together with the additional
information is not submitted, the Board may
defer consideration or decline
 Applicat must furnish information as exchange
may require time to time

12. Documents required with
application
 Listing application
 Form of submission and payment of fees
 An undertaking regarding updating of daily offer price
 Certificate of Incorporation
 Certificate of Commencement of Business of
Management Company
 Board Resolution of the Management Company for
listing of the Fund
 Names of Directors of Management Company along
with directorship of other companies listed on the
Exchange

13. Continue..
 Memorandum & Articles of Association
 Audited accounts for the last 5 years
 Confirmation that none of promoters /
sponsors / directors which are also promoters /
sponsors / directors in other Listed
Companies, are quoted in the Defaulters
Segment
 Name and address of the directors and
persons holding ten per cent or more of any
class of equity security in the Management
Company

14. Listing shall not be entertained
 Whose ceo has been found to have violated the
Listing Regulations of any others/listed company
on the Exchange in which he had been the Chief
Executive.
 Whose promoters/sponsors/controlling directors
are in the defaulters list of State Bank of Pakistan
 A running company for one full year or more,
reflecting losses in its last audited accounts, shall
not qualify for listing if its equity is eroded by 40%
or more.
 No Company will be listed unless it is registered
under the Ordinance as a public limited company
and its minimum paidup capital is Rs.200 million