The Securities and Exchange Commission of Pakistan (SECP) has revised Financial Resources Requirements of "trading and self-clearing" category of securities brokers.
The SECP has issued draft amendments to the Securities Brokers (Licensing and Operations) Regulations, 2016 through an SRO 267(I)/2020 here on Monday.
According to the revised regulations issued by the SECP, the minimum net worth requirement for "trading and self clearing" category shall be increased to Rs60 million with effect from October 1, 2021, and shall be further increased to Rs75 million with effect from October 1, 2022.
In case of a trading and self clearing broker, which does not obtain Broker Fiduciary Rating, the limit of assets under custody shall be 15 times of its net worth, and the assets under custody shall not include proprietary assets and the assets owned by its sponsors, directors and their close relatives, the SECP said.
Till the time a professional clearing member is available the trading only brokers shall be allowed to keep custody, and settle trades of their customers.
Under the revised regulations, the SECP has highlighted that a securities broker shall file monthly statements of net capital balance and liquid capital with the securities exchange and clearing house computed in a manner specified in schedule II and III respectively, immediately after coming into force of these regulations, and shall also submit statement of net capital balance reviewed by the statutory auditor of the securities broker in the manner specified as on close of second quarter of its year of accounts, and shall also disclose the net capital balance in its annual audited financial statements.
The securities broker shall start maintaining minimum liquid capital as per such amounts and/or ratios and after such period of time as may be specified by the commission, and upon such specification by the commission, the securities broker shall be required to disclose the calculation of liquid capital in its annual financial statements on and shall be required to submit statement of liquid capital reviewed by the statutory auditor of the securities broker in the manner specified as on close of second quarter of its year of accounts, and the requirement to maintain net capital balance, the requirement to submit monthly statements of net capital balance and the requirement to submit half yearly reviewed statements of net capital balance shall be discontinued.
Provided that the above requirements to maintain the net capital balance or the liquid capital and to submit the statements of net capital balance and liquid capital shall not be applicable on a securities broker, which has converted to trading only broker and has completely transferred its custody and clearing functions including proprietary, the SECP said.
In case where the trading and self clearing broker has not obtained the Broker Fiduciary Rating, the reduced limits of assets under custody as provided in sub-regulation 1B of regulation 6 shall be applicable, the SECP added.