In a bid to encourage greater investor participation in the capital market, the Securities and Exchange Commission of Pakistan (SECP) has proposed the introduction of referral incentive programs. Under the proposed framework, existing investors will be able to refer new clients to securities brokers.
As per the statement released on Thursday, the proposed structured referral programs will be introduced through amendments to the Securities Brokers (Licensing and Operations) Regulations, 2016. In this regard, SECP has published a concept paper proposing the relevant regulatory amendments.
Under the proposed framework, brokers will be allowed to engage their existing clients, i.e. referrers, to introduce new investors through structured referral programs. These programs will operate under clearly defined terms and conditions specified by SECP to ensure transparency and investor protection.
The incentives offered under such programs will be non-cash, such as commission discounts, trading credits, or similar benefits.
“These incentives will be capped and time-bound for both the referrer and the new client,” it said.
Brokers will also be required to clearly define the responsibilities, benefits, and conditions of the referral program, while remaining responsible for resolving any disputes arising under the scheme.
SECP shared that referral incentive programs are widely used in many international markets, including the United States, the United Kingdom, Switzerland, Hong Kong, Malaysia, and Singapore. Such programs typically offer benefits such as trading coupons, commission waivers, and reward points to encourage investor outreach.
SECP said that its proposed framework seeks to align Pakistan’s capital market practices with international standards while maintaining appropriate regulatory oversight and investor protection. The initiative is also expected to support client onboarding and broaden the investor base in the capital market.
SECP also invited stakeholders to provide feedback on the concept paper within 15 days of its publication.
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