Uzair bin Farid

The Securities and Exchange Commission of Pakistan (SECP) has extended its regulatory framework to include online-only brokers that entered the market in recent years. The SECP took this initiative in line with the growing footprint of brokers who deal exclusively through internet channels, and who do not have any concrete presence on the ground in the form of offices and infrastructure. The regulatory framework has been extended to online-only brokers after amendments were made to the Pakistan Stock Exchange (PSX) Rulebook.

This step by the SECP will greatly improve the climate of the investment industry in Pakistan as more and more companies and innovative financial products will be regulated according to the international rules of business. Under the new regulatory regime, all the processes from customer on-boarding to provision of final services will be carried out online under the watchful eye of the SECP so that no illicit activities take place and that people’s money goes into credible investments.

The framework includes a net worth requirement of Rs7.5 million, while a single member company is also eligible to apply. The SECP has also notified licence issuance and renewal fees at Rs50,000 and Rs25,000, respectively, for online-only brokers. Moreover, existing brokers may also switch to this new category to lower their overhead costs and to remain focused on the core business of trading. The launch of online-only brokers will totally transform the way investors buy and sell securities. It will provide a new level of convenience and accessibility to investors as they will no more be required to call or visit a physical office to place trades, which is often inconvenient and time-consuming.

The SECP in a public memo has asked the investors, brokers and other stakeholders in the investment industry to follow the SECP guidelines and regulatory framework to avoid any potential legal and regulatory hiccups in their trades. This will help them ground their investment strategies in concrete legal codes which will introduce consistency and predictability to their investment regimes. It will, therefore, improve the overall standing of the investors and the brokers in the market and they will be able to increase their profitability in the long term.

Credit: Independent News Pakistan-WealthPk