Rules approved for online-only brokers
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has launched online-only brokers through amendments to the Pakistan Stock Exchange (PSX) Rulebook.
This regulatory framework is a key step in meeting the growing demand for launching online investing platforms in Pakistan that the commission had been persuading not only to promote innovation in the securities market but to ensure investor protection too.
Under the new regime, the customer onboarding process will be conducted online and the online-only brokers will be able to provide trading services to their clients, exclusively through online means.
The online-only brokers will be a sub-category of trading-only brokers, as a result, the custodial and clearing services will be performed by a professional clearing member.
The SECP has said that this will be resulting in significantly less compliance and operational requirements, thereby allowing the brokers to concentrate on their core competencies of brokerage services and distribution.
This will enable new entrepreneurs to start brokerage businesses at lower preliminary and operational costs. The new category will also attract new investors in the capital market as it offers greater convenience for managing investments via online means.
The framework includes net worth requirements of Rs7.5 million and a single member company is also eligible to apply.
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 remain focused on the core business of trading.
The launch of online-only brokers is expected to revolutionise the way investors buy and sell securities by providing a new level of convenience and accessibility as investors will no more be required to call or visit a physical office to place trades, which is often inconvenient and time-consuming.
The SECP has said that the move would encourage entrepreneurs and individuals to undertake the brokerage business under this regime and applicants can obtain more information on the licence and the application process at the PSX website.
Published in Dawn, May 4th, 2023