The Securities and Alternate Fee of Pakistan (SECP) has launched new brokers regime for securities brokers by dividing brokers into three classes i.e. ‘Buying and selling Solely’, ‘Buying and selling and Self-Clearing’ and ‘Buying and selling and Clearing’ class.

It has launched minimal web price and web capital stability necessities for every of the classes. The SECP has notified SRO 26 (I)/2020 to situation draft amendments to the Securities Brokers (Licensing and Operations) Laws, 2016.

  • Below the categorization of securities brokers, the appliance for a license underneath these rules could also be made for any one of many following classes of securities brokers:
    1. “Buying and selling Solely” class shall imply that a securities dealer can solely execute its proprietary trades and trades on behalf of its prospects however can not settle executed trades or maintain custody of securities or cash owned by it and its prospects.
    2.  “Buying and selling and Self-Clearing” class shall imply that a securities dealer can execute in addition to settle its proprietary trades and trades executed on behalf of its prospects and might maintain custody of securities and cash owned by it and its prospects topic to such situations as could also be imposed by the Fee.
    3. “Buying and selling and Clearing” class shall imply that a securities dealer can execute in addition to settle its proprietary trades and trades executed on behalf of its prospects and might maintain custody of securities and money owned by it and its prospects topic to such situations as imposed by the Fee and, as well as, such securities dealer can settle trades of different securities brokers and their prospects and maintain custody of the securities and money owned by such different securities brokers and their prospects.
  • Securities brokers already licensed underneath these rules shall be required to transform to any one of many classes talked about by submitting an software for conversion to a selected class on or earlier than April 15, 2020 together with an affidavit that securities dealer shall adjust to the monetary useful resource requirement of the respective class until June 30, 2020.
    Supplied that from the date of software underneath sub-regulation (2) any securities dealer which has utilized for the Buying and selling Solely class shall not open accounts of any new prospects until the time it transfers its clearing, settlement and custody features inside a transition interval, the SECP stated.
  • A securities dealer licensed underneath these rules, which doesn’t adjust to monetary useful resource necessities for Buying and selling and Self-Clearing class specified underneath these rules, shall apply for conversion to “Buying and selling Solely” class by April 15, 2020, topic to compliance with monetary useful resource necessities of the respective class, and shall be required to switch its clearing, settlement and custody features until August 31, 2020 or such prolonged date as could also be specified by the Fee.
  • The apex regulator has stated that an applicant for a license as a securities dealer shall adjust to and guarantee ongoing compliance with minimal paid-up capital and web price of Rs. 35 million and web capital stability of Rs. 5 million. Supplied that from July 1, 2020 the monetary useful resource necessities as supplied shall be relevant on securities brokers.
    Supplied additional that current securities brokers who’re non-compliant with the prescribed monetary useful resource necessities in respect of paid-up capital and web price, shall be deemed compliant with the monetary useful resource necessities until July 1, 2020 topic to submission of software for conversion to new class of securities brokers.
  • With impact from July 1, 2020, every securities dealer shall be required to adjust to and guarantee ongoing compliance with the next ranges of minimal web price and web capital stability for every class: class of securities dealer, Buying and selling Solely, minimal web price Rs. 15 million and minimal web capital stability (not relevant); Buying and selling and Self Clearing class, minimal web price of Rs. 100 million and minimal web capital stability Rs. 10 million, and Buying and selling and Clearing class, minimal web price Rs. 500 million and minimal web capital stability, Rs. 15 million.
    Supplied that the minimal web price requirement for the Buying and selling and Self Clearing class shall be elevated to Rs. 125 million with impact from July 1, 2021.Supplied additional that a securities dealer with minimal web price of Rs. 250 million, which is a subsidiary of a financial institution with minimal long run credit standing of AA- and is compliant with the minimal capital necessities of the State Financial institution of Pakistan, perhaps issued license for the Buying and selling and Clearing class whether it is in compliance with all different situations relevant on the Buying and selling and Clearing class.
  • The securities brokers which get hold of license underneath Buying and selling and Self Clearing or Buying and selling and Clearing class shall be permitted to retain custody of proprietary and buyer property as follows:
Class of Securities dealerProperty Below Custody Restrict
Buying and selling and Self Clearing25 occasions of web price of securities dealer
Buying and selling and Clearing35 occasions of web price of securities dealer

You’ll be able to learn the main points right here.

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