Shams ul Nisa

The Pakistan Stock Exchange (PSX) has introduced same-day settlement for trades, aiming to improve trading efficiency, enhance liquidity, and provide a more robust trading environment for investors, reports WealthPk.

This move is part of a broader strategy by PSX to enhance its operational capabilities and attract more investors. The reduction in settlement time enables PSX to build a more flexible and dynamic trading atmosphere that is in tune with market shifts. The Pakistan Stock Exchange Limited was established in 1949. The company manages the trading of shares, scripts, participation term certificates, modaraba certificates, stocks, bonds, debentures stock, government papers, loans, and other securities issued by the Government of Pakistan or authorized agencies. Additionally, the company conducts, regulates, and controls the trade of these instruments and securities.

The PSX has continued to invest in infrastructure and introduce new products for investors and listed companies despite a challenging operating environment. The company recorded a pre-tax profit of Rs237.963 million for the first quarter of ongoing fiscal year 2025, 82% higher than the corresponding period. This increase is attributed to higher revenue from trading activities, a significant development in diversifying revenue streams, and improved performance of listed companies. The PSX posted a net profit of Rs248.442 million in 1QFY25, compared to Rs146.688 million in 1QFY24. The company's focus on effective cost management has resulted in an increase in expenses kept well below the rate of inflation.

The basic and diluted earnings per share for the first quarter of 2025 were Rs0.31 and Rs0.18, respectively. Additionally, PSX's same-day settlement initiative offers notable benefits such as better liquidity position, lower counterparty risk, more efficient trading, attracting fresh investors, and building stronger confidence in the market. Furthermore, it also aligns PSX with international standards, bolstering its reputation as a secure investment hub. Therefore, implementing such a system requires significant investment in technological infrastructure to support the real-time processing of trades and settlements.

Additionally, there may be regulatory considerations that need to be addressed as part of this transition, and the PSX will need to work closely with regulatory bodies such as the Securities and Exchange Commission of Pakistan (SECP) to ensure compliance with all relevant laws and regulations governing securities trading and settlement. Hence, market participants have expressed enthusiasm about the potential for improved trading conditions and increased efficiency in executing strategies. Industry analysts have noted that this move could significantly enhance PSX's reputation as a leading exchange in South Asia, as it demonstrates its commitment to fostering a transparent and efficient trading environment.

The PSX's same-day settlement will lead to further innovations such as automated trading systems, advanced analytics tools, and expanded product offerings. Thus, investor confidence will increase due to improved trading conditions. Additionally, PSX may see an increase in new listings from companies seeking access to capital markets, which could boost market capitalization and stimulate economic growth in Pakistan. This innovative approach not only improves PSX's service offerings but also sets a precedent for other exchanges in the region.

Credit: INP-WealthPk