SECP softens rules for stockbrokers

Now, PSX members will need a single licence for a whole range of services

KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has softened regulations for Pakistan Stock Exchange’s (PSX) members who are desirous of becoming full-fledged securities’ brokers, but it has excluded securities’ advisers from this revision in rules.

The regulator has decided to issue only one securities’ broker licence to a PSX member, which will allow him to deliver a whole range of brokerage house services to his diversified clientele, according to a statement issued on Monday.

Under the old regulations, each securities’ broker was required to acquire roughly eight licences to become eligible for delivering all services including futures brokerage and futures advisory as well as acting as an accredited representative.

However, PSX members will still have to acquire a separate licence to become securities’ advisers and it will no more be an integrated function of the securities’ brokers under the revised regulatory regime.



The new regulations also allowed the securities’ brokers to become distributors of mutual fund units.

The objective of rationalising the award or renewal of securities brokers’ licences was to “reduce the regulatory burden and promote the ease of doing business,” the SECP said in the statement. “A licensed securities’ broker will not require all other mandatory licences.”

According to the new simplified procedure for annual renewal, a securities’ broker will only be required to provide recommendation from the PSX along with an undertaking from him and payment of regulatory fee.

“The SECP has also approved a single cut-off date for the expiry of licences for the entire brokerage industry. This is to facilitate the brokerage industry as well as the frontline regulator ie PSX,” it said.

According to the new regulations, the condition of getting agents of securities’ brokers registered with the SECP has also been done away with.

“The existing regime requiring registration of agents with the SECP will be discontinued and the proposed draft of Accredited Representatives Regulations 2017 will not be promulgated,” it said.



The SECP will also undertake an objective review of the advisory regime under the Securities Act 2015 vis-à-vis the advisory regime under the non-banking finance companies regulatory framework.

“Two different regimes for the same regulated activity with different requirements not only create disparity and confusion, but they also result in regulatory arbitrage,” it said. 

Published in The Express Tribune, January 16^th, 2018.

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