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IFMP Fundamentals of Capital Markets Certification (FCM), Pakistan study materials
IFMP Fundamentals of Capital Markets Certification (FCM), Pakistan study resources

IFMP Fundamentals of Capital Markets Certification (FCM), Pakistan: Capital Markets Fundamentals

IFMP Fundamentals of Capital Markets Certification (FCM), Pakistan · Work through your exam, one topic at a time.

All guide sections

Capital Markets Fundamentals

This domain tests your grasp of how Pakistan’s capital market is structured and how an investor’s order becomes a settled holding. Questions focus on market segments, the roles of SECP, PSX, SBP, CDC and NCCPL, listing boards, order types, and settlement mechanics.

Market structure and regulators

  • The SECP is the securities regulator: it licenses the PSX, CDC, NCCPL, brokers and collective investment schemes. The SBP regulates banks, the money market and government securities; it does not regulate PSX equity trading.
  • The primary market raises new capital through IPOs, rights issues and preferential allotments; cash goes to the issuer. The secondary market trades existing securities between investors on PSX; cash goes to the selling investor.
  • PSX operates the Main Board, the GEM Board for smaller growing companies, and a Debt Securities Market for instruments such as TFCs and Sukuk. Indices such as KSE-100 track listed equities.

Trading and settlement

  • A market order seeks immediate execution at the best available price but gives no price guarantee. A limit order executes only at the stated price or better, so it may remain unfilled.
  • A broker routes the order to PSX; NCCPL clears and settles the trade; CDC holds shares in book-entry form. Settlement follows the exchange’s prescribed cycle, not instantly, so the buyer must have cash ready.

Worked example

An investor places a limit buy for 1,000 shares at PKR 20.00. The best ask is PKR 20.10, so the order does not execute. If the investor instead sends a market order and fills at PKR 20.10, principal is PKR 20,100. At an assumed 0.15% commission, commission is PKR 30.15, so the cash obligation is about PKR 20,130.15 before CDC/NCCPL charges. The limit order protected the price but risked missing the trade; the market order secured the shares but accepted slippage.

Traps that cost marks

  • Mixing up CDC (depository) with NCCPL (clearing and settlement).
  • Assuming a market order guarantees the quoted price.
  • Treating an IPO as an exchange-traded secondary purchase.
  • Attributing PSX equity regulation to SBP rather than SECP.
  • Ignoring that a limit order can stay unfilled.