Glossary · Investing Basics
Stock Market
The marketplace where shares of publicly listed companies are bought and sold. In Pakistan, this refers to the Pakistan Stock Exchange and the ecosystem of brokers, regulators, and clearing institutions that support it.
01—What is Stock Market?
The definition — and what it means in practice.
A stock market is the marketplace where shares of publicly listed companies are bought and sold. It brings together investors, listed companies and intermediaries so that ownership can be transferred at transparent, quoted prices. Trades are executed through licensed brokers and recorded on an exchange’s trading system, with supporting institutions handling clearing, settlement and custody so that cash and shares change hands in an orderly way.
For an investor, the stock market matters because it is where you can enter or exit a shareholding, discover a market price, and access liquidity. It is also where corporate actions such as dividends, rights issues and bonus shares affect your holdings. Understanding how trading, settlement and price movements work helps you interpret volatility, manage order execution, and track what you actually own after a trade completes.
If you buy 100 shares at Rs 50 on the stock market, you pay Rs 5,000 (plus charges) and become a shareholder once the trade settles.
- A stock market enables buying and selling shares in publicly listed companies at quoted prices.
- It includes the exchange plus brokers, regulators and post-trade institutions that complete trades.
- Prices move based on supply and demand; liquidity affects how easily you can trade.
- Corporate actions and disclosures can change value, rights and cash flows for shareholders.
02—How stock market works on the PSX
The Pakistan-specific rules, conventions, and numbers.
In Pakistan, the stock market mainly refers to the Pakistan Stock Exchange (PSX), formed in 2016 by merging the Karachi, Lahore and Islamabad stock exchanges. The PSX is regulated by the Securities and Exchange Commission of Pakistan (SECP). After you trade through a broker, clearing is done through NCCPL and your shares are held electronically at the Central Depository Company (CDC).
PSX equity settlement is T+1 (one business day), and each investor needs a Unique Investor Number (UIN). Brokers must hold a Trading Right Entitlement Certificate (TREC) licence to provide access. Trading runs Monday–Friday, with a pre-open session and continuous trading roughly 09:30–15:30 Pakistan Standard Time, which is when most investors place orders and track market moves.
Most PSX-listed shares have a Rs 10 face value, and cash dividends are declared as a percentage of that face value (for example, a “100%” dividend equals Rs 10 per share). For most equities, daily price limits (circuit breakers) apply at ±10% or Re 1 around the previous close (LDCP), whichever is higher. Cash dividends are subject to withholding tax: 15% for filers and 30% for non-filers.
03—Common misconceptions
Where investors most often get this wrong.
The stock market is the same thing as the economy.
The stock market reflects prices of listed companies and investor expectations. The broader economy includes many unlisted businesses and activities not captured by PSX share prices.
If a share’s price rises, the company automatically gets that money.
Most trading is in the secondary market, where investors trade with each other. Companies mainly raise fresh capital in primary-market transactions such as an initial public offering.
Once I place an order, I own the shares immediately.
On the PSX, trades settle on T+1. Ownership is finalised after settlement, with shares held electronically at the CDC through the post-trade process.
04—Using stock market on BSL
Where this term shows up across the platform — with live data.
05—Frequently asked questions
What investors ask about stock market on the PSX.
Frequently Asked Questions
In Pakistan, the stock market primarily refers to the Pakistan Stock Exchange (PSX) and the supporting ecosystem for trading listed shares, including brokers, the SECP as regulator, NCCPL for clearing, and the CDC for electronic shareholding.
T+1 means a trade settles one business day after the trade date. After settlement, cash and shares are exchanged through the clearing and depository process used for PSX trades.
Yes. Each investor needs a Unique Investor Number (UIN) and trades through a broker that holds a TREC licence. Your shareholding is maintained electronically at the CDC after settlement.
For most equities, the PSX applies daily price limits of ±10% or Re 1 around the previous close (LDCP), whichever is higher. These limits can affect whether your order executes if a stock hits its upper or lower limit.
Cash dividends on listed shares are subject to withholding tax. The rate is 15% for income-tax filers and 30% for non-filers. Capital gains tax on listed shares depends on holding period and filer status and may change through Finance Acts.
Common indices include the KSE-100 (a free-float benchmark with semi-annual review), KSE-30 (liquid large caps), KMI-30 (a Shariah benchmark using AAOIFI-based screens), and the KMI All Shares (all compliant listings).
06—Related terms
Keep building the picture.
The sole stock exchange in Pakistan, formed in 2016 through the merger of the Karachi, Lahore, and Islamabad stock exchanges. Headquartered in Karachi, the PSX lists over 500 companies across multiple sectors.
A unit of ownership in a company. Holding stocks makes you a shareholder, entitled to a proportional share of the company's assets and profits.
A licensed member of the stock exchange who executes buy and sell orders on behalf of clients and may also provide investment advice. All PSX stockbrokers must hold a valid TREC and be registered with the SECP.
The regulatory body responsible for overseeing Pakistan's capital markets, corporate sector, insurance industry, and non-banking financial companies. The SECP must license all PSX brokers.
The entity responsible for clearing and settlement of trades executed on the PSX. Ensures that both the buyer and the seller receive shares and payment upon settlement of the trade.
The institution responsible for maintaining electronic records of securities ownership in Pakistan. All PSX-traded shares are held in dematerialised form through the CDC. Investors access their holdings via a CDC Investor Account or through their broker's sub-account.
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