The Securities and Exchange Commission of Pakistan (SECP) is paving the way for digital brokers with a new regulatory framework.
Treated as a sub-category of trading-only brokers under the new framework, online-only brokers will be allowed to provide trading services to their clients exclusively through online avenues.
This also means custodial and clearing services will be performed by a professional clearing member, translating into fewer compliance and operational requirements to allow brokers concentrate on their core competencies of brokerage services and distribution.
“This will enable new entrepreneurs to start brokerage business at lower preliminary and operational costs. The new category will also attract new investors in capital market as it offers greater convenience for managing investments via online means,” explained the regulator.
For any existing brokers seeking to lower their overhead costs and to focus primarily on the core business of trading, they are welcome to switch to this new category. The minimum net worth requirement is set at PKR7.5 million (US$26,058.6) and the license is open to single member company. License issuance and renewal fees are PKR50,000 (PKR173.73) and PKR25,000 (US$86.86) respectively.
The new rules for online-only brokers follows the SECP’s recent decision tasking the Central Depository Company of Pakistan to develop and implement a centralized digital onboarding platform.