Characteristics of Stock Exchange
1.Formation:
The stock exchange is formed under the Securities and Exchange Ordinance, 1969. All the provision for the promotion and registration of stock exchange has been given under this ordinance.
2.Registration:
The registration of the stock exchange is necessary. Securities and Exchange
ordinance 1969 says that no stock exchange shall operate or carry on its functions unless such stock exchange is registered under this ordinance. The stock exchange is managed by a management committee known as board
3. Management:
of directors. These directors are elected by the members of the stock exchange.
4. Membership:
Every person who is the citizen of Pakistan and who fulfills the requirements
and meets qualification given under section 3 of the securities and exchange rules
1971 can becomes the member of a stock exchange.
5. Liability of Members:
The stock exchange is a corporate body and the liabilities of its members are limited up to the amount, which they have guaranteed.
6.Nature of Business:
The stock exchange deals in the sales and purchase of second hand shares,
debentures, bonds and participation term certificates of the companies and securities of the government.
7. Rules and Regulation:
The stock exchange is governed by the rules framed by the federal govemment by notification in the official gazette. But for internal management, the stock exchange is empowered by the federal government to make regulations, as it thanks best for the achievement of its purposes.
8. Approved Securities:
The stock exchange only deals in securities and shares of the companies,
which have been approved and listed in stock exchange. All these share debentures
and securities must have some one face value.
9.Books of Account:
According to section 7(1) of the securities and exchange rules1971 the stock exchange is bound to maintain the books of account and other documents like journal, cash book, ledgers, bank pass book, register of members, register of authorized clerks, record of securities deposits etc.
10. Annual Report:
The stock exchange is bound to print annual report of its affairs and to submit it to the authority not less than fourteen days before the meeting of its shareholders in which it is to be laid.
11. Cancellation of Registration:
According to section 10 of the securities and Dfa Ho Exchange Ordinance 1969, the federal government may suspend or cancel the registration of stock exchange if it contravenes any provision of this ordinance or any rule or directions made under this ordinance.
