Securities Brokers (Licensing and Operations) Regulations, 2016: SECP receives feedback on draft amendments

The Securities and Exchange Commission of Pakistan (SECP) has received stakeholders feedback on draft amendments in the Securities Brokers (Licensing and Operations) Regulations, 2016 that in view of Covid-19, the minimum net worth requirement for Trading & Self Clearing broker (TSC) should be maintained at the present level of Rs.35 million.

According to the public feedback received on draft Amendments in the Securities Brokers (Licensing and Operations) Regulations, 2016 notified through S.R.O. 267(I)/2020 dated March 30, 2020, the financial resource requirements for TSC brokers have been implemented after several stages of public consultation spanning almost a year.

In April 2019 a concept note was shared with the market participants wherein requirement of Rs.250 million was proposed for TSC brokers. Subsequently, a revised concept note was shared with the market participants in November 2019 wherein net worth requirement for TSC broker was reduced to Rs.150 million.

Based on consultation, draft amendments in the Regulations were made public for eliciting comments with further reduced requirements of Rs.100 million for TSC brokers.

After public consultation, this requirement was further reduced to Rs.75 million. Subsequently, another round of consultation was carried out with the market participants wherein the requirement of Rs.50 million was agreed which will be gradually increased as provided in the Regulations.

It may be noted that since TSC brokers would be retaining custody of public money, they should be subject to enhanced licensing requirements which are aimed at providing maximum protection to investors while enabling ease of doing business to the market participants.

Enhanced financial resource requirements are therefore essential to protect the interests of investors, stakeholders feedback added.