ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has approved the regulatory framework for online only brokers through amendments to the Pakistan Stock Exchange (PSX) Rulebook, paving the way for the launch of Online Only Brokers in Pakistan.
Cognizant of growing demand for online investing platforms, the SECP is committed to promoting innovation in the securities market while ensuring investor protection. This regulatory framework is a significant step towards achieving that goal.
Under the new regime, the customer onboarding process will be conducted online and the Online Only brokers will be able to provide trading services to its clients, exclusively through online means.
The Online Only Brokers will be a sub-category of Trading Only brokers. As a result, the custodial and clearing services will be performed by Professional Clearing Member, resulting in significantly less compliance and operational requirements, thereby allowing the brokers to concentrate on their core competencies of brokerage services and distribution. This will enable new entrepreneurs to start brokerage business at lower preliminary and operational costs. The new category will also attract new investors in capital market as it offers greater convenience for managing investments via online means.
The framework includes net worth requirements of PKR 7.5 million and a single member company is also eligible to apply. SECP has also notified license issuance and renewal fees at PKR 50,000 and PKR 25,000 respectively for Online Only Brokers. Moreover, existing brokers may also switch to this new category to lower their overhead costs and to remain focused on the core business of trading.
The launch of Online Only brokers is expected to revolutionize the way investors buy and sell securities by providing a new level of convenience and accessibility as investors will no more be required to call or visit a physical office to place trades, which is often inconvenient and time-consuming.
The SECP encourages the entrepreneurs and individuals to undertake the brokerage business under this regime. For more information about the Online Only Broker license and the application process, interested applicants may visit the PSX website at www.psx.com.pk.