The Securities and Exchange Commission of Pakistan (SECP) has directed securities brokers that an applicant for a licence as a futures broker shall comply with and ensure ongoing compliance with minimum paid-up capital and net worth of Rs 20 million and net capital balance of Rs 5 million. The SECP has issued financial resources requirements for the applicants under the Futures Brokers (Licensing and Operations) Regulations, 2018 here on Tuesday.
The new regulations shall apply to futures brokers dealing in futures contracts based on specified commodities and financial instruments offered by or traded on futures exchange other than a securities exchange.
In case a futures broker fails to meet the minimum paid-up capital and/or net worth requirements as specified, the futures exchange shall immediately restrict the trading facility of such futures broker and its licence shall be suspended by the Commission without prejudice to any other disciplinary action under the Act and these regulations.
The SECP said that the net worth of a futures broker shall be calculated as total assets less total liabilities less surplus on revaluation, if any, created upon revaluation of fixed assets.
The SECP has also imposed prior permission from the Commission to undertake Futures Broker activity. A person desirous of undertaking futures broker activity shall before obtaining TRE Certificate of PMEX make an application to the Commission for obtaining permission as set out in the specified form.
While deciding to grant licence to a futures broker, the Commission may seek additional information from other government agencies or regulatory bodies including obtaining credit information bureau (CIB) reports from the State Bank of Pakistan and may also conduct a pre-licence assessment or a visit of the premises of the applicant to verify the genuineness of information submitted, the SECP said.
A futures broker shall file monthly statements of net capital balance with the futures exchange computed in a manner specified in Schedule II, immediately after coming into force of these regulations, and shall also submit an audited statement of net capital balance on half yearly basis, the SECP added.
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