March 11, 2006	Saturday	Safar 10, 1427

ISLAMABAD, March 10: The Islamabad Stock Exchange has proposed implementation of the national market system (NMS) with a view to ending market fragmentation to the advantage of all stakeholders.

The system would enable Islamabad, Karachi and Lahore stock exchanges to link their trading system in a way that orders of investors entered into the trading system of any of the exchanges would be freely matched, stated an ISE announcement here on Friday.

“The NMS will cover all market segments and commonly listed securities. Each exchange will maintain its independent existence and identity and regulate its members and orders entered into its trading system,” it said, adding that members of the exchange with lesser turnover would pay a market access fee of two paisa per share traded in every eligible trade to members of the exchanges with greater turnover.

Members of the Karachi Stock Exchange will receive the market access fee both from members of the ISE and Lahore Stock Exchange. Members of the LSE will receive the fee from members of the ISE.

According to the ISE, advantages of the NMS to the investors were greater liquidity, better price discovery, elimination of custody risks in inter-exchange trading, lower cost of trade, better quality of trade execution and broader market access.

“There is no advantage of the NMS to the investing public. Core advantage of the NMS to members of the LSE and ISE is that they would receive large and recurrent market access fee. The members will also be able to serve their clients better and expand their business,” the statement added.

Those members who carried out arbitrage business will face disadvantage, as the business will not be possible in the NMS.

The advantage of the NMS to the SECP and the government is that it will facilitate them in achieving broader policy objective of developing Pakistan’s stock market in line with international practises, broadening of investor base and improving transparency in stock market trading.