Pakistan Stock Exchange Merger: A Prudent Move or an Imprudent Impulse

Abstract

For more than two decades, demutualization has been forcing the way for the concept of stock exchange merger in the globalfinancial markets. In Pakistan, demutualization fostered one-ofits-kind merger that took place with the amalgamation ofthree domestic exchanges into PSX. It allowed Pakistani exchanges to transferfrom member owned to investor owned organizations. With an exploratory approach, the research has assessed PSX merger and its consequences on stock market ofPakistan. To a certain extent, PSX merger has led to effects identical to global mergers; however, its long term consequences are yet to be witnessed. Analysis showed that PSX merger is apparently a good movefor Pakistani market as it has promised significant investments that are essential to upgrade and mobilize the market while keeping exchanges' activities under direct surveillance. With key motives to attract private investments to upgrade the exchanges ’infrastructure and to mobilize exchange trading activities, PSX is found to have pros and cons that may substantiate in the long run. It is plausible to state that like eveiy decision, PSX move has its foreseeable positive and negative effects that can be well apprehended with a wise approach to managing the demutualization process and it's after effects. To state the fact, PSX decision is turning out to be a sagacious effort until now and ifthe authorities keep a hawk eye on both sides ofthe decree then this coin may turn over a new leafin the history ofPakistani stock exchange.