The Securities and Exchange Commission of Pakistan (SECP) has said that no broker whether individual or corporate can trade with any other broker of the same exchange on proprietary and/or client account.
In reference to the directive No: F. 13/SMD/SECP/2005 dated 23/9/2005 issued by the SECP on the subject "Brokers operating through other brokerage houses" and based on some queries made by some market participants in relation to broker to broker trading on the same exchange, the SECP also clarified that the chief executive/managing director (with whatever name called) and nominee director of the brokerage house can only trade through the brokerage house which he/she is associated with in the said capacity.
The SECP said that immediate family members (spouse, children, siblings and parents) of CEO/MD and Nominee Director of a brokerage house may trade only through the brokerage house which the CEO/MD and Nominee Director is associated with. The employees of a brokerage house shall only trade through the brokerage house which they are associated with in the said capacity, the SECP said.
The directors (other than CEO/MD/Nominee) and shareholders of a brokerage house may trade through other brokers of the same exchange, the SECP said, adding that trading by directors and shareholders shall be subject to fulfilment of certain disclosures to be prescribed by the exchange with the prior consent of SECP. The SECP also advised the stock exchanges to review their respective regulations for proprietary trading to remove any anomalies/inconsistencies therein in terms of the above clarifications to bring them in line with the spirit of the subject directive. The required amendments should be submitted for SECP on priority, it added.
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