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the aftermath of unprecedented
events of September 11, 2001.
I would like to congratulate all the ISE Members on the successful
implementation of agreed agenda of reforms under the Capital Market
Development Programme as required by the Asian Development Bank. It is
beyond doubt now that the Securities and Exchange Commission of Pakistan
considers the ISE as one of the fast transforming and rapidly growing bourse
of the country.
The financial year 2000-2001 has been a tough year for the economy of the
country. The agriculture faced drought and continuation of water shortage.
The export growth was checked by the slow down in the manufacturing sector
while the revenue collection could not come up to the mark. Although capital
market in Pakistan has been under-going massive reforms towards transparent
and good governance, the market in real business terms could not match the
acceleration of structural changes and improvements partially due to
external factors.
Despite various set backs encountered by the country in general and stock
market in particular, your Exchange managed to post a record surplus of Rs.
1.45 million during 2001 which represented 63% increase over last year
surplus of Rs. 0.90 million. This remarkable feat was achieved in spite of a
hefty depreciation provided during the year 2001.
In the pre-September 11 environment our market was poised for recovery but
the lack of strength of Palc rupee against US dollar some six month back did
not allow the desired expansion in the Capital Market. After the incidence,
our market had to undergo a question of survival and all three stock
exchanges of the country remained closed for an entire week for the first
time in the history of the stock market. It is, however, pertinent to note
here that even in such a precarious conditions our Exchange did not have any
settlement or clearing problem but we kept it shut in solidarity with other
two bourses, the fact which was even acknowledged by the Regulatory
Authority.
On top of our achievements during the year, was the listing of the mega
scrip Hubco on the ISE as all of you are quite aware that the company had
not been inclined for even deemed listing on the smaller bourses. The main
credit for the listing of Hubco goes to the Chairman SECP as it was only due
to his personal influence and interest that we got Hubco listed at our
Exchange. Currently, Hubco scrip constitutes around 40% of the total trading
volume in the Islamabad Stock Exchange.
Another achievement that would go a long way in the promotion of ISE
alongwith other local bourses, is the setting up of the National Clearing
Company of Pakistan Limited (NCCPL). The entity, which was envisaged for the
National Clearing and Settlement System endorsed by the Asian Development
Bank, is a reality now and the ISE has already contributed its share of
equity to the company recently incorporated. I would like to announce that
the software required by the company for integrated clearing system is very
much in place. Trial runs as well as mock trading by our Members have been
successfully completed. The integrated clearing system is likely to come on
stream with two scrips initially by end of the year.
The complete replacement of traditional balance order trading system with
T-+-3 trading and settlement system was another significant development,
which has taken place during the year. The new system has not only brought
about efficiency in trading but also would go a long way in strengthening
risk management regime. The new system has also checked blank selling to a
considerable extent. Arrangements are also being finalized to commence
trading in futures contracts by early January, next year. In addition,
during the year under review, we have further strengthened our monitoring
and surveillance system, which is already well recognized by the SECP,
investors and otherbourses.
Last but not the least amongst the achievements of the Exchange during the
year, is the Amendments in the Articles of Association to give effect to the
agreed reforms towards structural changes in the governance setup.
Amendments regarding new mode of induction of non-member directors,
reduction of tenure of Chairman/Directors from three years to two years and
the appointment/removal of managing director with SECP's prior concurrence,
were incorporated in the Articles of Association, as agreed by the three
stock exchanges as well as SECP. It is our resolve to carry out any further
amendment(s) in the Articles as well as regulations, if it brings in
transparency, efficiency in the stock trade and causes boost in investors'
confidence.
I feel no exaggeration in saying that the ISE achieved all that due to your
whole hearted cooperation and selfless devotion of the Board of Directors.
It is a piece of luck for the ISE that the non-member directors have been
contributing even more to the promotion and development of the Institution.
They have played a key role in strengthening and enhancing the institutional
capacity of the Exchange with
respect to both, the management and the front-line regulator.
Before concluding this review I would also like to mention the progress in
the area of training and research, a fast growing regular feature of the
ISE. In the first place, we sent our staff to Karachi Stock Exchange where
they received specialized training in the areas of trading, settlement, and
risk management. It was a matter of pride for the Exchange that Secretary
ISE attended early this year one-week training course on risk management
regime at the National Stock Exchange, Mumbai under the auspices of South
Asian Federation of Stock Exchanges (SAFE).
I, on behalf of the Board of Directors and the Members also thank the
Securities and Exchange Commission of Pakistan and its
Chairman who has been a guiding light in our endeavor to make the Exchange a
well regulated, sound and updated marketplace.
In the end I feel duty-bound to express my personal gratitude to the fellow
Directors and Members of the Exchange. It was team spirit and the result of
collective efforts that our Exchange stands at par with others despite the
fact that ISE is the youngest bourse of the country. |