Lahore Stock Exchange Goes Live with New Algorithmic Trading System

Pakistan’s second largest trading venue, the Lahore Stock Exchange (LSE), extended its electronic trading capabilities with the launch of a new algorithmic trading system. The new solution will enable brokers and traders to enhance Liquidity and adopt new trading strategies as they aim to bolster trading activity at the exchange. The move highlights the country’s commitment on developing its domestic financial markets operating environment.

The new system will allow the LSE to compete on a regional level against the Karachi Stock Exchange and Islamabad Stock Exchange. The firm’s CEO and Managing Director, Aftab Ahmed, explained during a media briefing that apart from efficiency, traders who are looking for arbitrage opportunities can benefit from the new system.

Mr. Ahmed commented in a statement: “The Algo will take advantage of the price difference between the two exchanges based on the spread defined by the broker himself.”

The launch of the platform coincided with an internal conference that promoted Pakistan financial markets in the world's financial capital, London. A series of events throughout the country were concluded with a specific event that focused on the advantages of the Pakistan financial markets at the London Stock Exchange. The new algorithmic system should open the market up to institutional investors. The CEO added: “With improvement of liquidity due to recent development will attract institutional investors at the LSE and it is hoped that trading activities at LSE would increase significantly.”

Proprietary Technology

The LSE was Pakistan's first trading exchange to launch an automated trading system in 1996.This was followed by Online Trading systems through the world wide web for brokers and retail investors. The LSE has been a pioneer of e-trading systems in the country and developed its own property technology, the venue outlined details about the platform on its website, explaining: “ULTRA TRADE – an indigenously developed, sophisticated Automated Trading System being used in the Stock Exchange Markets across the globe. It offers its customers with a totally integrated approach across the entire investment life cycle by integrating market data for better price discovery through automated trade execution, using efficient matching algorithms.”

The LSE cooperated with the Ghana Stock Exchange and sold its system to the emerging West African nation in 2008. The system has a range of functionality including;

• Order Book shows the status of a broker’s orders in real-time.
• Message Window shows the order and trade confirmations, cancellations, company announcements, bulletins and messages from other traders.
• Market best orders window and market best price level window are used to see the top best orders and the market depth respectively.
• Water Fall Ticker lets the trader watch the market activity in real-time along with symbol statistics.
• Dynamic reports are available to view member wise trade history, Order Book, Event Logs etc.

Financial Literacy

In 2014, the LSE launched an online training competition for participants to learn and understand the stock market. The Lahore Stock Exchange is proactive in promoting financial literacy in the South Asian nation. It is the only Exchange in Pakistan which has a regular Financial Literacy Program.

The firm reported that it has joined hands with the South Asian Federation of Exchanges (SAFE) to provide basic financial knowledge to students of all ages across the nation. In sequel to the FLI program, LSE has successfully introduced “Virtual Investment Competition” to lead the program to an advanced level.

Lahore is one of the largest regions for FX and CFD trading in the country with several introducing brokers operating in the city. Most firms co-operate with international brokers in the UK and Dubai, notably, City Credit Capital, a London-based provider of foreign products which has a formal co-operation with Harvest Topworth and Excel Financial Services.

Karachi-based Pakistan Mercantile Exchange (PMEX) was the first exchange in South Asia to launch the MetaTrader 5 trading platform. The commodity derivatives focused venue which offers a range of contracts including, the gold, silver and oil futures products is gaining traction among domestic investors.