Introduction

The Islamabad Stock Exchange (ISE) was incorporated as a guarantee limited Company on 25th October, 1989 in Islamabad Capital territory of Pakistan with the main object of setting up of a trading and settlement infrastructure, information system, skilled resources, accessibility and a fair and orderly market place that ranks with the best in the world. The purpose for establishment of the stock exchange in Islamabad was to cater to the needs of less developed areas of the northern part of Pakistan. 

The ISE has set the highest standards of operational efficiency and is committed to support a climate of confidence and optimism that encourages and promotes trading activity. It also provides for conducive environment to channelize the small investments of the residents of less developed areas. The ISE offers an easy access to a growing and vibrant capital market for both domestic as well as foreign investors and actively encourages the listing of eligible and profitable companies, both large and small to make it an exciting and diverse Exchange. The Exchange is playing a pivotal role for economic growth of the area thereby contributing the overall economic prosperity and welfare of the country.

At present there are 103 Members out of which 29 are corporate bodies including commercial and investment banks, DFIs and brokerage houses. The other 74 Members are individual persons who are well educated, enterprising and progressive minded. The affairs of the Exchange are governed by the Board of Directors. The ISE has recently undergone a reforms package introduced by Asian Development Bank through Government of Pakistan. As a result, the Governing Board of the ISE has been restructured in order to bring the Exchange in line with the other emerging markets of the World. Now for the first time five non-member directors have been coopted on the Board of the Exchange. In order to protect the interest of the investing public, an Investors Protection fund has been planned to be established by the Exchange.

Since the inception of automated trading system which is called ISECTS the trade volume is multiplying day by day and the average daily turnover has now crossed the figure of 7.5 million shares. The automated system which was indigenously developed replaced the outcry system in 1997. Now all the listed securities are traded through the ISECTS. The system of physical handling of shares and securities is being phased out and majority of the scrips are settled through Central Depository Company of Pakistan Limited.

At the moment there are 285 companies/securities listed on the Exchange with an aggregate capital of Rs. 155,352.618 million. The market capitalization was Rs. 209,360.670 million (US $ 4,551.132 million) as on 10-09-98 . The Exchange has offered free initial listing to all the companies. Nevertheless the pace of listing has remained slow for the past some time as the economy of the Country is under consistent pressure due to internal as well as external factors. The crisis of South East Asian Markets has also effected adversely the Pakistani markets. 

In comparison with major financial markets around the World, the functioning of capital market in Pakistan is still very much in its infancy and lacks advanced technology. In this context efforts are being made to bring ISE in line with the International system and methodology for implementing automated and technology intensive system.