Cancellation of licence: Futures brokers must honour obligations towards customers: SECP

The Securities and Exchange Commission of Pakistan (SECP) will ensure that a futures broker whose licence is cancelled shall inform all its existing customers, settle all dues of the customers within 15 days and shall remain responsible for clearing and settlement of all its obligations up to the date on which it has been working as a futures broker.
Sources said that the S. R. O.600(I)/2018 of the SECP has notified draft Futures Brokers (Licensing and Operations) Regulations, 2018.
Under the regulations, a futures broker may apply to the Commission for cancellation of its licence along-with a confirmation from the futures exchange that such futures broker has informed all its existing customers, settled all dues and pending claims of the customers and has completed all formalities for closure of business.
The Commission may, after being satisfied that all formalities for closure of business including settlement of customer claims have been completed, cancel the licence of such futures broker. Provided that the Commission may impose such conditions as it deems appropriate at the time of such cancellation of licence.
The licence of a futures broker suspended forthwith under the following circumstances:
Firstly, the TRE Certificate such futures broker is cancelled by the futures exchange.
Secondly, the futures broker surrenders its licence.
Thirdly, the futures broker is declared defaulter by the futures exchange or TRE certificate suspended by the futures exchange and the reason for such default and/or suspension is not removed within a period of six months from declaration of such default and/or suspension.
Fourthly, the futures broker surrenders the TRE certificate and the futures exchange cancels such TRE certificate subject to the requirements of regulations of the futures exchange.
Fifthly, the futures broker is declared insolvent by a Court.
Sixthly, the futures broker fails to apply for renewal of licence before its expiry.
Seventhly, the licence is suspended by the Commission and such suspension has not been revoked till the time of expiry of licence issued to the futures broker.
Provided that the futures broker shall be restrained to take fresh positions, however, it is only allowed to divest its exiting holdings and settle all dues and pending claims of its customers.
A futures broker whose licence is cancelled shall inform all its existing customers, settle all dues of the customers within fifteen days and shall remain responsible for clearing and settlement of all its obligations up to the date on which it has been working as a futures broker. The Commission shall send an intimation of cancellation of licence of a futures broker to the futures exchange, the SECP added.