SECP To Create Category Of ‘online-only brokers’ In Stock Trading

The Securities and Exchange Commission of Pakistan (SECP) will introduce a new category – ‘online-only brokers’ to enable the trading of shares in the stock market through online means only.

SECP To Create Category Of 'online-only brokers' In Stock Trading

The Securities and Exchange Commission of Pakistan (SECP) will introduce a new category – ‘online-only brokers’ to enable the trading of shares in the stock market through online means only.

The SECP’s new annual report (2021-22) revealed that in line with the global trend of increased digitalisation in the financial markets, a new category of “online-only” brokers has been proposed to be introduced which shall enable trading in the stock market using online means only. With features such as less stringent financial resource requirements, the online-only broker is intended to provide greater convenience and attract new investors in the capital market.

The concept of operationalization of Professional Clearing Member (PCM) has been formally operationalised for providing clearing, settlement, and custodial services to the Trading Only (TO) category of Securities Brokers as part of the new brokerage regime.
Under the new regime, securities brokers have been categorised into three categories Trading Only, Trading and Self-Clearing and Trading and Clearing according to their net worth and governance requirements.

To augment online facilitation to financial services market investors through a standardised, centralised customer information database, CDC on the advice of the SECP, developed a comprehensive concept paper for introducing and launching of an online Account Opening Portal which will act as one-stop solution to investors of all asset classes of the SECP regulated intermediaries.

Securities and Exchange Commission of Pakistan (SECP) imposes penalty of Rs77m on 579 listed cos, licensed entities

A working group has been formed with the mandate to highlight amendments in respective regulatory framework for gateway portal and to standardize account opening forms for onboarding of investors for all asset classes, i.e, securities brokers, mutual funds and insurance sector.

After finalization of the regulatory and operational modalities, the gateway portal shall be launched. Compliance reforms for Trading-Only brokers, the SECP has been engaged with SROs for bringing reforms in the compliance requirements of Trading-Only (TO) Brokers following the implementation of the Professional Clearing Member (PCM) Regime.

The reforms are intended to clearly identify the responsibilities with respect to compliance of TO brokers with regulatory requirements. Bringing more transparency at general meetings Concept of scrutinizer has been introduced and mandatory appointment of at least one scrutinizer is required in case of some businesses.

The scrutinizer would independently oversee the voting process to create greater transparency. Keeping in view the advancements in information technology, it has been made compulsory for the Board of the listed company to provide option of electronic voting in case of election of directors and all special businesses transacted at general meeting of the company. This will help to provide flexibility and convenience to shareholders. The draft proposal is made public for comments, the SECP said.

As a step towards increasing investor base in the capital market, regulatory framework has been introduced for opening and operating Account Facilitation Centers (customer help centers) by securities brokers.

These centers are intended to enhance the physical presence of brokers and facilitate account opening for new investors through utilization of the branch networks of commercial banks, Asset Management Companies and insurance companies, in addition to allowing specially trained sales staff of brokers to carry out permissible marketing activities in public places under proper checks, the SECP added.

Originally published at Business Recorder