DERIVATIVES IN PAKISTAN
In the year of 2001, the derivative products of equity of Pakistan were started in the Stock Exchange of Karachi. In the start of this launching, a single stock of futures was brought for introduction which was deliverable for just one month. It has almost nine years passed after that but this stock market is not considered as much as developed when it is compared to Indian market. The derivates related to finance, and which were traded in terms of exchange were initially started in Bombay Stock market and National Stock Market of India in the year of 2000’s June. Some of the futures related to index which were based on BSE Sensitive Index (Sensex) and S&P CNX Nifty Index (Nifty) were started in very first phase. From that time, the Indian National Stock Exchange has seen a high rise suddenly n the turnover of contracts related to derivates.
Generally, in the developing or developed stock markets, the people who invest in the market mostly rely on taking positions and instruments related to derivates as compared the things which are underlying assets. The case is not like that in Pakistan. From the era of January to June 2010, the market constituted by futures in the forms of value and value of the market were as 3% and 8% respectively. In the final days of the year 2004 and the initials of 2005, this contract was picked up in the terms of volume. In this time period this value was increased up to 30 and 40% of the values in the market.
But unfortunately at this time because of the infrastructure market and weak risk management measures, such as the market crisis in the market in March 2005, the outgoing cannot maintain a position of influence. After the crisis, many of the measures were taken to manage...
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...e market, which have the permission to trade in the market. Just one institution from the total number claimed about their regular participation in the market and with that 10 institutes have the permission as on primary basis to trade to capture arbitrage opportunity. 6 of them hedge the portfolios they have already. (See Annexure A & B for survey results)
Moving forth, the institutions were asked to rate the market of derivatives in Pakistan in terms of convenience and efficiency. The scale was as like 1 to 5 and it was as, ‘1’ for “Excellent” while “5” was assigned as for very poor. We got the response of 76% participants on the ranks of “4” and “5”.
This thing made us surprised that a good number of institutions shown their belief in our sample that the authorities of regulation are successfully saving the investor’s interest in the market of derivatives.
The Dodd-Frank Wall Street Reform and Consumer Protection Act’s policies haven’t really been implemented to the extent that regulators would have liked. Although the legislation takes many steps in addressing systematic risks in the United States financial system and improving coordination among regulators, some critics believe that alternative options might have been more effective. The coming years will give us a better understanding of how well the Dodd-Frank Act addressed these concerns.
The industry of securities brokerage (or named stockbroker) may be divided into three categories: the multinational financial giants, the traditional adviser-based stockbrokers and the internet-based stockbrokers.
P. Morgan’s participation is a form of assurance in itself. Never has there been another panic where a private individual wielded such influence in the economy that $25 million can be raised in a matter of minutes. When Morgan demonstrates confidence in the market, whether by words or decisive action, he turns himself into a trusted “third-party observer” providing a testimonial, a “shortcut to evaluation” for all common participants (Mitnick, 2009).
This article will discuss the issues of cross-border corporate insolvency in the context of the collapse of the Lehman Brothers by giving some overviews on the case first. Then, it will discuss the issues in details. There will be an overview of the laws applicable in Lehman’s case and the discussion on the resolution of the issues in the next part. After that, the article will suggest few improvements that can be done to such resolution. The last part will then conclude the whole article. This analysis shows that for a ‘giant’ multi-national company like Lehman Brothers which involve in cross-border insolvency, a very good cooper...
Rousmaniere, Peter. “Facing a tough situation.” Risk & Insurance 17.7 (June 2006): 24-25. Expanded Academic ASAP. Web. 23 March 2011.
Obviously, financial establishments can endure breathtaking misfortunes notwithstanding when their risk management is top notch. They are, all things considered, in the matter of going out on a limb. At the point when risk management fails, be that as it may, it is in one of the many fundamental ways, almost every one of them exemplified in the present emergency. In some cases, the issue lies with the information or measures that risk directors depend on. At times it identifies with how they recognize and impart the risks an organization is presented to. Financial risk management is difficult to get right in the best of times.
A generation ago, it was generally believed that security markets were efficient in adjusting information about individual stocks and stock market as a whole (Malkiel, (2003)). However, we cannot deny the efficient market hypothesis has several paradoxes.
The expanding global market has created both staggering wealth for some and the promise of it for others. Business is more competitive than ever before, and every business, financial or product-based, regardless of size or international presence is obligated to operate as efficiently as possible. A major factor in that efficient operation is to take advantage of every opportunity to maximize profits. Many multinational organizations have used derivatives for years in financial risk management activities. These same actions that can protect multinational organizations against interest rate futures and currency fluctuations can be used to create profits for those same organizations.
This report clearly shows the importance of the role of ‘Risk Management’ for the project of Sydney Opera House and way the risk is supposed to be managed in the areas such as planning, budgeting, cost control, quality and scheduling of the project. Moreover, it demonstrates that risk has to be identified before it could be effectively managed. With the proper identification, the projects go into a blind mode and potential threats are ignored which can easily lead a successful project into a failed project. A poorly designed risk management plan will bring in further risks and uncertainties and this will only result in a more complex and out of control situation in terms of effective project management.
The project is done to find out the impact of stock split on the stock market. In our project, we have made use of event study methodology to assess the accuracy of stock price reaction of 39 public listed Indian companies in National Stock Exchange (BSE) in the year 2006 and onwards. The abnormal returns (actual returns-returns from regression line) results were taken for 20 days before and after the announcement date to test whether the result is significant or not (Level of significance=5%). The project shows that there is no significance difference in the price level before the announcement date while after the announcement date, there was a significant difference in the price level for few days(level of significance being 5%) The project supports the hypothesis that Indian stock market is semi strong efficient.
Howells, Peter., Bain, Keith 2000, Financial Markets and Institutions, 3rd edn, Henry King Ltd., Great Britain.
The modern Islamic Finance industry is young, its timeline begin only a few decades ago. However, islamic finance is involving rapidly and continues to expend to serve a growing population of muslims as well as conventional.
In 2003, Capital Market Authority (CMA) was established under the Capital Market Law (CML) to act as regulatory supervisor for the capital market. Capital Market Authority regulate and supervise different critical issues such as market conduct, merger and acquisitions, corporate governance, and issuance of financial tools such as mutual funds, IPOs and Sukuks “Islamic bonds”. Thus, the establishment of CMA defined a new stage of financial liberalization in the country. CMA established the legal and regulatory platform to open up the Saudi capital market, support the privatization effort and increase public participation in the market while promoting efficiency and transparency. Furthermore, in March 2007, Tadawul exchange was re-incorporated as joint stock Company with a capital of USD 320 million to increase autonomy for the exchange. After the formation of CMA, the Saudi capital market continuously evolving in term of breadth, depth and complexity. In March 2010, the number of listed companies increased to 139 from 76 back in 2001 as local companies started to look at capital markets to fund their future financing needs. Due to the increasing in investors participation, Tadawul’s total market capitalization at a compound annual growth rate “CAGR” of 34.8% to SAR 1.9 trillion which about USD 507 billion between 2003-2007. Due to the financial crisis in 2008-2009 the market capitalization for Tadawul declined to SAR 1.2 trillion, which about USD 320 billion. Between the years of 2003-2007, the stock market activity grew in a fast pace without interruption in term of value, volume, and market cap along with rising in the number of transactions. The total trading volume of shares on Tadawul Stock Exchange increased at a CAGR of 11.4% between 2003-2009. The
Machiraju, H. R. , 2002. International Financial Markets And India. 1st ed. New Delhi: New Age International.
Because of the strong ethical component of this designation, its principles should be adopted by financial professions everywhere in the world, especially in post-2007 financial crisis days, partly started by a lack of moral principles and diligence. While for chocolate-lovers Switzerland is synonymous with a yummy heaven, for me the country, being the banking center of the continental Europe, equals to well-established traditions in the financial industry. If you want to learn something excellent, gain the knowledge from the best. Switzerland is one such place that will give me the opportunity to combine the values of both the highly-regarded education in finance and hands-on analysis of theories, applied in Swiss banking and financial systems.