- What is the role of a stock exchange?                                                                                                    
     � The exchange is responsible for vetting companies before they can be admitted to have their shares traded on public market.
     � It provides a marketplace for shares to be bought and sold, by bringing companies and investors together in one place.
     � It watches over the market to ensure that it is working efficiently and fairly thereby acting in a policing role for the market.

- Why Do We Need Stock Exchanges?                                                                                                        
Companies and investors both need stock exchanges, but for different reasons. For companies, stock exchanges provide a means of raising money to develop and expand their businesses. For investors, stock exchanges provide secure and reliable marketplaces in which they can buy and sell shares.

- Islamabad stock exchange.                                                                                                                       
Islamabad Stock Exchange is the youngest stock exchange in Pakistan that was established in 1989 whereas trading of shares on this exchange started in 1992. Over the years, the ISE has played a crucial role in the capital formation of the companies and the wealth generation for its investors thereby contributing to the economic development of our country.
Today, what happens in Islamabad Stock Exchange affects a great many people in Pakistan in their daily lives. Shares in the oil marketing companies whose outlets we use to refill our vehicles from, the banks we use, and the companies that supply electricity to our homes are all traded on the Islamabad Stock Exchange.

- Regulatory structure of Islamabad stock exchange.                                                                            
The working of the Islamabad Stock Exchange and for that matter of all stock exchanges in Pakistan is regulated under the oversight of the Securities and Exchange Commission of Pakistan (SECP), which formulates rules for efficient and transparent trading of securities. The SECP also has the ultimate responsibility to protect investors through market supervision and ensuring that its laws and regulations are complied with by all stock exchanges.

- The corporate structure of ISE.                                                                                                                 
The affairs of ISE are run by a Board of Directors that is headed by a Chairman. The Board has a total number of ten directors including the Chairman and the Managing Director. Rest of the eight directors come evenly from the members and the SECP appointed independent directors. The Chairman of the Board is elected out of five member directors on the board. The Managing Director acts as the chief executive officer of the ISE who is appointed with the prior approval of the SECP.

- Members of Islamabad Stock Exchange.                                                                                                
The trading of securities is done through members (brokers) of Islamabad Stock Exchange who buy �seats� or memberships for conducting brokerage business in our exchange. The members of the ISE provide a link between individual investors and the stock market by buying and selling shares on behalf of the investors. The ISE continually monitors all the trading activities of its members to ensure that they are acting within its strict rules. This in turn provides investors with a market they feel confident to use.
These members are also required to fulfill the eligibility criteria/registration process defined by Islamabad Stock Exchange and the SECP. The authorized strength of membership at ISE is 200, but a far less number actually maintain an �active� brokerage house. The membership at ISE is of two types namely the corporate memberships and individual memberships.

- What is a share?                                                                                                                                           
Each share is a small stake in a company. You can buy large or small lots to match the amount of money you want to invest. When the company does well, its shares can rise in value. If the company hits a bad patch, its share can fall in value.

- Why do companies issue shares?                                                                                                           
Companies can issue shares to raise money from investors. This money is used to help the company to develop its business and grow.
The companies can issue different types of shares but the main one that you will come across is an ordinary share. The shares give owners a stake in the company by claiming profits in the form of dividends and also enable them to vote at annual meetings of these companies.

- What is a listed company?                                                                                                                         
A company can only offer its shares for trading on the ISE after it meets the listing requirements of the ISE. Once listed, these companies have to comply with the disclosure and financial reporting standards prescribed by the SECP so as to provide all material information to the investors. This information is aimed to help the investors in making informed decisions about their investments.

- Why do investors buy shares?                                                                                                                 
Evidence shows that over periods of 10 years, investing in shares has provided greater returns than most other forms of savings. Shares can not only provide you with regular income in the form of dividends, but also have the potential to grow in value thereby providing you with the capital gains.
Through the Islamabad Stock Exchange, you can invest with speed and ease in a variety of Pakistani companies. As an investor, you can choose to invest in a wide range of companies, from well-known blue chip companies to fixed income term finance certificates.

- Ways of becoming a shareholder.                                                                                                            
Shares of a company are offered at the stock market at the following stages
     � Initial Public Offering (IPO)
     When companies offer shares to the general public for the first time, it is known as floatation or an Initial Public Offering (IPO). These can be bought directly from the company with out paying stockbroker�s commission. You might see an advertisement in a newspaper from a company issuing shares or your stockbroker might tell you about a company making an IPO. Simply fill in the share subscription form and deposit the form along with subscription cheque in a branch of the designated bank(s).
     � Right Issues
     Right issues are issued when companies need to raise additional capital to finance their expansion projects or to meet working capital needs, etc. In case of rights issues, the existing investors have the right to subscribe to these new shares in proportion to their respective shareholdings.
     � Trading Market
     The most common way of buying/selling in the stock market is through trading in the secondary market. Through a stockbroker, you can buy shares from existing investors who wish to sell them and vice versa.

- The mechanics of share dealing.                                                                                                             
There are various ways of investing in the stock market: you can deal directly in shares, invest through a unit trust or investment trust or let your investment be handled by an advisor.
     � Selecting a Stockbroker
     Stockbrokers are your link to the stock market. Their job is to help you get the best available price when you want to buy or sell your shares, be careful in selecting your broker. Ask references from people who frequently trade at the ISE and ensure that the stockbrokers/agents that you deal with are duly registered with the SECP.
     � Opening of account
     Once you have made a decision regarding the broker with whom you intend to deal, you should ensure that an account is opened in your name by filling the account opening form. Make sure that you are assigned a unique account identity and that all your transactions bear this identity. It is imperative that the terms and conditions prescribed in the account opening form are read very carefully and well understood by you. It will be in your interest to give clear instructions as to who can operate the account. It is preferred that if the investor gives specific instructions that business can be transacted in the account only on his/her instructions.
     � Buying/Selling directly
     Once you have decided to buy/sell shares of a particular company, contact your stockbroker. You can ask to buy/sell a certain number of shares at or up to a certain value. Get the contract note confirming your order immediately and check for the following information:
          - Name and number of securities
          - Date on which the order is executed
          - Nature of transaction (spot, ready or forward and also whether bought or sold)
          - Price at which the transaction is executed
          - Commission charged by the broker.
     � Types of Orders
          - Limit Order: In a limit order, client specifies the price at which the order is to be executed.
          - Market Order: Also known as at best order, it is executed at the prevailing market rate.
     � Rates of Commission
     Stock brokerage commissions vary according to the extent of services you avail. You should select the service that meets your needs and requirements. Before you start dealing in shares, determine how much you want to pay stockbrokers for their services. You need to shop around for the right service at the right price. Charges will differ on whether you wish to invest directly or indirectly. Ask if there are any ongoing costs of stockbrokers, other than the dealing commission, each time you buy or sell.
     � Central Depository System
     An electronic book entry transfer of securities known as the Central Depository System has completely replaced the older system of physical transfer of shares. Investor account services have been introduced in order to facilitate individual investors to maintain their accounts directly with the CDC.
Although for the investors, the opening of account with CDC entails more transaction costs in addition to the brokerage commissions, but it adds more security to the investor�s money. Investors are therefore encouraged to open their accounts with the CDC while they actively trade in shares through the brokers.

- What happens when you are a share holder?                                                                                       
There are several types of shareholders: some are long term investors who simply tuck away their investments for years while others trade frequently and keep a close eye on how their shares are performing. You can check your shares� performance in various ways. A daily indicator of share price movements is available in many newspapers and also on the website of the relevant stock exchange. You may access this information directly or indirectly or through your stock broker/advisor.
Information articles about many companies are regularly published in newspapers and investment magazines. Your stockbroker may also provide valuable information. Some publish newsletter for their clients, reflecting their views on the performance of selected companies. Annual reports of companies also contain useful information. Some companies have shareholder relations departments that can help with factual information.

- Important things to know.                                                                                                                         
     � Buying shares can offer advantages over saving in deposit accounts. You share the rewards when the company does well and the price of the shares goes up. But, if the company performs badly, the share price may go down and the value of your investment will be reduced.
     � Other factors such as the performance of the stock market as a whole and the general economic climate may also affect the price of your shares. This is the risk you take with owing shares and it is not known for companies on the stock market to go out of business altogether.
     � Shareholders� funds are �risk capital�. Shareholders can be rewarded for taking this risk and the potential returns on your money can be higher than other investments.
     � Investment in shares is not a route to instant wealth and should be viewed as an investment to hold over several years. The price of shares can go down as well as up, so do not invest money, which you need: make sure you keep some money readily available in a deposit account. Then, if you need cash urgently, you will not be forced to sell shares if the price is low at that time.
     � Buying and selling shares and tracking their performance can be time consuming but it can also be rewarding for those who have the time to manage their own investments.
    � You are cautioned to not invest any money with the stockbroker as a deposit at a fixed rate of return. Such a deposit has no legal standing and the investor is exposed to the risk of losing his money.
     � The aim of investing in stock and shares is to buy low and sell high. Knowing when, however, is the challenge. Many investors attempt to time the market: they try to figure out when the market is going up and buy before it does and then anticipate when it is going to crash and sell before that. Usually you try to buy when the upswing has begun and sell as the downswing starts. However, such accuracy is extremely difficult to determine.
     � The stock market is driven by two emotions: greed and fear. People are usually caught up in the boom fever and pay beyond the worth of shares � this is the greed that drives bull market. In bear markets, people get carried away with the ruling pessimism and are eager to sell their investments leaving in the worst rumors � this is the fear that dominates bear markets.

- Investor protection.                                                                                                                                     
     � You should always ensure that the stockbroker you choose to deal with is properly authorized under the Securities & Exchange Ordinance, 1969 to conduct investment business i.e. a member of a Self-regulatory organization (SRO) such as Islamabad Stock Exchange.
     � As a shrewd investor, you should know your rights and responsibilities and should be aware of the rules that govern your investments as well as the legal recourse available in case things go wrong.
     � Stock Exchanges are front line regulators and as such, they have elaborate systems to address investor�s complaints. Should you have a complaint regarding any member of Islamabad Stock Exchange, contact the ISE management at the following address:

Department of Investor Relations

Islamabad Stock Exchange, Blue Area, Fazl-e-Haq Road,

Islamabad.

Phone: (92-51)111-600-800

Fax:051-2275045

     � You can also report abuse to the SEC by sending all your complaints in writing to the �Vigilance Cell� at the SEC at the following address:
                                    Deputy Director
                                    Vigilance Cell
                                    Securities & Exchange Commission of Pakistan
                                    NIC Building
                                    63 � Jinnah Avenue
                                    Blue Area
                                    Islamabad. Pakistan
                                    Fax : (92 51) 9204915
                                    Website : www.secp.gov.pk