Investing through PSX
There are two other stock exchanges in Pakistan namely;
- Pakistan Stock Exchange (PSX).
Out of all the three Exchanges, the PSX is the premiere Stock Exchange of the country, with over 700 listed companies. It was established soon after the creation of Pakistan.
Trading and Settlement - PSX offers a computerized trading system to provide a fair, transparent, efficient and cost effective market mechanism to facilitate the investors. Whereas the settlement of these trades are done through the National Clearing Company of Pakistan (NCCPL).
The settlements of trades takes place on netting basis for trading in T+2 / BO, Spot, Provisonal and Deliverables Futures in a manner that:
- - netting of purchase(s) and sale(s) in quantity thereon for the notified clearing period.
- - netting of financial obligations thereon for the notified clearing period.
- - issuing deliveries as well as financial obligations of netted outstanding balances.
Benefit of T+2 / BO Settlement System - It reduces the time between execution and settlement of treades, which in turn reduces the market risk which in-effect reduces settlement risk, as the settlement cycle is shorter.
Circuit Breakers - As a part of risk management, Pakistan Stock Exchange has devised circuit breakers. These are limits of price movements and consists of an upper limit and a lower limit. For share prices starting from Rs. 20.01 onwards the upper limit or lower limit is at +5% or -5% from yesterday’s closing price. For share prices ranging from Rs. 0.01 to Rs. 20.00 the upper limit or lower limit is at fixed at Rs. +1.00 or Rs. -1.00 from yesterday’s closing price.