in order to ensure investor protection and their confidence in the futures market, the Securities and Exchange Commission of Pakistan (SECP) has directed all brokers of Pakistan Mercantile Exchange to comply with certain requirements while exercising discretionary authority over their clients' trading accounts.
Key requirements imposed on commodity brokers include the following:
i) Loss threshold limit of 25% of the investment amount, breaching which shall trigger revocation of the discretionary authority;
ii) Timely intimation to clients via SMS and email for all trades executed as well as weekly reporting to the clients communicating rationale for those trades; and
iii) Submission of monthly report to Pakistan Mercantile Exchange with information pertaining to trader IDs of clients who have provided discretionary trading authority to brokers and list of employees who are authorised to carry out discretionary trades.
These measures are aimed at controlling abusive trades, thereby curbing potential for churning by the commodity brokers.-PR
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