With sharp improvements noticed in macro-economic indicators along with no changes seen in the pace of economic reforms, Pakistan has emerged strongly on the financial radar of the leading financial houses of the world.
During this process, Pakistan has received credit-rating up gradations and has successfully integrated its capital markets with the world through large over-subscriptions of GDR issues of M.C.B. & O.G.D.C along with other issues including N.B.P, U.B.L and KAPCO, etc.
The analysts favourably recommended us to investors and this further lends support to carry on with the reforms program and infra-structural developments of the Capital market. The establishment of Unified Trading System by Lahore Stock Exchange (L.S.E.) and Islamabad Stock Exchange (I.S.E) shall go a long way to achieve such cherished goals.
This previous year shall serve as a milestone for L.S.E due to the fact that it was when we decided to enter into a U.T.S. Agreement with I.S.E. The concept of U.T.S was first conceived at I.S.E. and eventually after the signing of M.O.U, on 16-06-2006 and the U.T.S. Agreement on 26th August 2006 was made formal. It is worth mentioning though that the U.T.S. trading software has the capacity to take K.S.E. in its loop in the shortest span of time and with little modifications if they wish to join eventually.
The U.T.S Agreement provides a jointly establishing technological link, whereby all bids or offers by respective members of both exchanges shall be placed on and transmitted to the Central Trading System for universal matching and execution of orders on an integrated and real time basis. Both the exchanges, as independent legal entities, will keep playing their role as front-line regulators.
This Agreement shall be valid for five years and can be extended with mutual agreement. The Joint Steering Committee, (J.S.C), constituted after the signing of M.O.U shall remain in place during its validity. The Manager M.I.S. Dept of L.S.E. shall serve as Chief Technical officer and the J.S.C. shall overview the working of U.T.S, take corrective steps if required, and effectively work for greater capacity utilisation.
The J.S.C. had about 14 marathon sessions, worked rigorously to help the Consultants with their decisions on a wide ranging set of issues including fast and reliable connectivity, hardware sizing, software systems and their modifications, risk-fencing and management, compliance issues, the finalisation of the draft regulations for approval of S.E.C.P and the reviewing of the preparations before the launching of U.T.S.
U.T.S. is expected to deliver many benefits, first and foremost of which would be the fact that members of both stock exchanges shall have an excess to a bigger pool of liquidity which would result in bigger volumes, realistic price-discovery mechanism, better surveillance, address the issue of market fragmentation, in relative sense and offer scalability to execute, much bigger trades.
It is of course important for members to note that the excess-fee being paid by them shall be far less than the commission being paid by them at present. This saving should result in lesser cost of doing business, for the investing public and bring in more transparency and strengthen the market integrity. All such trades shall be properly regulated, after the compliance of risk-management regime and executed, under their direct control.
The launching of U.T.S is destined to create a much bigger virtual cycle, which can be peddled-up further if more and more market participants are made to play their contributory role.
The JSC has already taken up certain vital issues which would be pro-actively followed up and addressed to ensure visible change in U.T.S. outlook during the coming months. Success, InshaAllah, would soon knock our doors and the System is set to deliver much more than expected. Needless to say the management of N.C.S.S, the managers of clearing houses of the exchanges, the I.T. team of L.S.E. and others, have worked together as a team and turned this dream into reality.