ISLAMABAD (Eshfak Mughal):- The Securities and Exchange Commission of Pakistan (SECP) has barred from engaging in proprietary trading and keeping any custody of securities and money on newly introduced category “Online Only” of Securities brokers.

The “Online-Only” category of Securities brokers shall mean a sub-category of Trading Only securities broker, which can only execute trades on behalf of its customers through online or electronic means and shall not offer brokerage services through any office.

The SECP has proposed amendments in the Securities Brokers (Licensing and Operations) Regulations, 2016 in this regards.

According to the amendments, Online Only Broker shall not engage in proprietary trading. However, the Online Only Broker can execute trades on behalf of its sponsors, substantial shareholders, directors and their close relatives.

An Online Only broker shall not be allowed to keep any custody of securities and money, proposed in the amendments.

The SECP has also introduced Category of securities broker along with limits of Minimum Net worth and the minimum net capital balance.

The Minimum Net worth has been set Rs.15 million while no requirement will be Minimum Net Capital Balance -PKR million on the trading only securities brokers. The minimum net worth has been set Rs.7.5 million for Online Only securities brokers.  

The Commission has proposed Rs50 million minimum net worth and Rs10 million Minimum Net Capital  for Trading and Self Clearing brokers.  The minimum net worth has been set Rs.500 million and minimum net capital will be required Rs 15 million for trading and clearing brokers.

The SECP has also introduced following free structure of renewal of license and grant of license of securities brokers and online only brokers.

                   Description of feeAmount of fee in PKR
Fee to be paid at the time of applying for license as a securities broke 
a) For renewal of licence as a securities broker a1) In case of Online Only BrokerRs50,000 Rs.25,000
a) For grant of licence to act as a securities broker b1) In case of Online Only BrokerRs100,000 Rs. 50,000

Applicants for the Trading Only Broker category shall comply with the following minimum requirements:

Online Only Broker shall mandatory offer internet-based trading services to its clients and shall not provide physical place for trading to its clients.

They will also implement adequate measures to ensure that:

  • Procedures and controls are in place to monitor and test the systems on a regular basis;
  •  Adequate cyber-security mechanism is in place;
  • Operational and technical control systems are in place to manage the risks;
  • All electronic communication is digitally signed, encrypted and secured with a backup stored in soft and secured form; and
  • It complies with IT infrastructure standards, certifications or any other requirement or conditions, as may be specified by the Commission and/or the securities exchange.

The above additional requirement of compliance with section 78 of the Act shall not be applicable on Online Only Broker and on Trading Only brokers who have completely transferred custody of assets to Professional Clearing Member or Trading and Clearing broker, proposed in the amendments.

By adminmy

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