Brokers barred from obtaining licences for futures advisers

The Securities and Exchange Commission of Pakistan (SECP) Thursday prohibited securities brokers, duly licensed by the Commission and providing custodial services as integral part of brokerage business model, from obtaining licenses for securities advisers or futures advisers. The SECP has issued SRO 253 (I)/2018 here on Thursday to amend Securities and Futures Advisers (Licensing and Operations) Regulations, 2017.
According to the revised regulations issued by the SECP, no person shall act as or perform the functions of a securities adviser or futures adviser unless such person is licensed with the Commission as a securities adviser or futures adviser under the Securities Act or Futures Act and these regulations and a person performing distribution of Collective Investment Schemes (CIS) and/or Voluntary Pension Fund (VPF) units of multiple AMCs by entering into contracts with such AMCs shall also be required to obtain license as a securities adviser under these regulations, in order to perform functions of a distributor.
A securities broker duly licensed by the Commission and providing custodial services as integral part of brokerage business model, shall not be eligible to obtain license for securities adviser or futures adviser, SECP imposed restriction.
Provided further that a securities broker duly licensed by the Commission to undertake securities broker activity may provide securities and future advisory to its brokerage customers being incidental to the conduct of his business as a securities broker without receiving any separate compensation thereof and may distribute CIS and/or VPF units of multiple AMCs by entering into contracts with such AMCs subject to maintaining membership of an association of securities advisers and/or futures advisers, as the case may be, or any other association or self regulatory organization, which is approved by the Commission for the purpose, and abides by the code of conduct specified by such association at all times; compliance with the regulatory requirements applicable on distribution of CISs and/or VPFs units of multiple AMCs and compliance with the regulatory requirements of these Regulations.
In terms of section 2 (23) (B) of the Futures Act, a futures broker duly licensed by the Commission to undertake future''s broker activity for futures contract based on commodities and/or financial instruments may provide futures advisory to the extent of futures contract based on commodities and/or financial instruments to its customers being incidental to the conduct of his business as a futures broker without receiving any separate compensation thereof, SECP added.
An NBFC duly licensed by the Commission for Investment Advisory Services may undertake securities advisory and future advisory subject to maintaining membership of an association of securities advisers and/or futures advisers, as the case may be, or any other association or self regulatory organization, which is approved by the Commission for the purpose, and abides by the code of conduct specified by such association at all times; compliance with the regulatory requirements applicable on distribution of CISs and/or VPFs units of multiple AMCs and compliance with the regulatory requirements of Chapter III, Chapter IV and clause 24 of Chapter V of these Regulations.
Provided further that a banking company shall be eligible for applying securities adviser license to the extent of distribution of units of CIS and/or VPS of multiple AMCs only: Provided further that any other person performing the functions of a securities adviser or future adviser or is engaged in the distribution of CIS and/or VPF units of multiple AMCs immediately before coming into force of these regulations, shall be required to obtain a license under these regulations as a securities adviser or future adviser not later than June 30, 2018, the SECP added.