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Thursday March 28, 2024

Bourses sign accord for merger

Pakistan Stock Exchange

By Israr Khan
August 28, 2015
ISLAMABAD: An agreement to merge the three main stock markets in the country, the Karachi, Lahore and Islamabad stock exchanges, was reached on Thursday, a senior official said.
All the three stock exchanges signed a memorandum of understanding (MoU) to merger and form Pakistan Stock Exchange (PSE), which expected to boost the country’s profile among the foreign investors.
Under this plan, the PSE will re-jig the ownership from the broker-owned bourses to a public-owned entity and which intends to sell shares to the public in an initial public offering.
Chairman Demutualization Committee of the ISE Mukhtar Ahmed Jaffery, LSE Yasser Mahmood and KSE Haji Usman Ghani signed the merger MoU.
The agreement was signed in the presence of Finance Minister Ishaq Dar.
Dar termed the move a landmark achievement and said the formation of Pakistan Stock Exchange is a win-win situation for all and will go a long way towards a sustainable development of the capital markets, in the best interest of all stakeholders and Pakistan.
"It is the day of satisfaction for me that the task of demutualisation and integration of stock exchanges has been achieved in just five months."
He said full benefits of this exercise require completion of the divestment of public sector enterprises (PSEs) shares.
The minister expressed his resolve to improve the outlook of Pakistan’s capital market to attract investment and improve the standard of living of the common man.
Dar said the government, in collaboration with the Securities and Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP), is focusing on the creation of a strong, vibrant and competitive financial and capital market to pave the way for a strong economy.
He said the government plans to raise the foreign exchange reserves and expressed the hope that it will touch the $21 billion mark by the end of December.
In 2012, the Stock Exchanges (Corporatisation, Demutualisation and Integration) Act 2012 was signed into law to facilitate the process. The Act also calls for the sale of up to 40 percent of the stock exchanges to a strategic investor, which can be a foreign stock exchange or depository company.
The Turkish and Qatari stock exchanges have shown interest in buying 40 percent stakes.
However, after the integration their stance will be cleared whether or not they are still interested.
The finance minister also appreciated the SECP’s efforts for getting Pakistan’s Index reclassified in the upcoming Annual Market Classification Review of MSCI.
He asked the SECP for reclassification of Pakistan’s capital market as MSCI emerging market. He also acknowledged the SECP for achieving 62 percent compliance with the standards of the International Organization of Securities Commission assessments.
SECP Chairman Zafar Hijazi said the formation of Pakistan Stock Exchange is a major milestone in the history of Pakistan’s capital market that will lead to achieve the government’s vision of a fair, efficient and transparent market.
Pakistan’s capital market has enough potential to become a regional capital hub and the SECP aims at building the country as one of the best capital market in the Asian region, Hijazi said.
He said the PSE would be in a better position to invite reputed stock exchanges from across the world to become its strategic partner, but the national interest will be kept supreme, while making decisions in this regard.
He said there is an option to sell majority of the shares of Pakistan Stock Exchange to local financial institutional investors and the investment from international stock exchange will be kept limited to the provision of required technological support.
He said the SECP is working hard to get Pakistan’s index included in the MSCI emerging market by April next year.
He also sought support from the finance minister and the SBP governor in achieving his ambitious targets.
He also announced that all the brokers registered in the ISE and LSE will now be entitled to trade at the PSE platform.