PSX allows under-18 investors to open trading accounts

The Pakistan Stock Exchange, in collaboration with the National Clearing Company of Pakistan Limited and the Central Depository Company, has announced comprehensive guidelines for opening trading accounts for minors.

As per guidelines, a guardian may open a trading account on behalf of a minor and the authority to operate the account will rest exclusively with the guardian, who will handle all trading instructions and related activities.

Developed in consultation with the Securities and Exchange Commission of Pakistan (SECP), the initiative aims to promote financial inclusion and encourage investment habits among the younger generation.

According to the notice issued by the PSX chief regulatory officer, the guidelines define the process and conditions for opening and operating trading accounts of minors through their natural or legally appointed guardians. The new framework, titled “Guidelines for Opening Trading Accounts of Minors,” has been introduced to consolidate and simplify procedures, enabling minors to access financial services in a regulated and secure manner.

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Under the new rules, a guardian may open a trading account on behalf of a minor by presenting valid identification documents issued by the National Database and Registration Authority (NADRA), such as a Juvenile Card, Form-B, or Child Registration Certificate.

If the guardian is someone other than the father, a court-issued Guardianship Certificate will be required. Each account will be titled to reflect the relationship between the minor and the guardian. The authority to operate the account will rest exclusively with the guardian, who will handle all trading instructions and related activities.

The guidelines further specify that receipts and payments may be made through the minor’s own bank account opened under the guardian, a joint account with the guardian, or the guardian’s personal bank account.

To safeguard the interests of minors, trading in futures markets, leveraged products, negotiated deals, and same-day square-up transactions will not be permitted. Securities brokers are required to act strictly in accordance with these operational conditions.

When a minor reaches the age of 18, the system will automatically alert both the broker and the guardian one month in advance. Upon attaining majority, the minor’s account will be temporarily suspended until a new trading account is opened in the individual’s own name.

All securities from the minor’s sub-account will then be transferred to the new account without any capital gains tax implications, preserving the original acquisition cost and date.

Before the age of 18, securities held in the minor’s account will be treated as part of the guardian’s portfolio. Once the new account is established, the inventory will be shifted to the individual’s name, following the First-in-First-Out principle, similar to existing procedures for gift transfers.

The PSX has directed all securities brokers to ensure strict compliance with these guidelines and the related operational requirements.