SECP launches ‘Online Only Brokers’

ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) on Tuesday introduced ‘Online Only Brokers’, a digital facility for brokers that will allow them to register and provide trading services online.

Using the facility, an online broker would be eligible to operate as a single member company with minimum net worth requirement of Rs7.5 million. To facilitate new entrants, the commission has proposed rationalised license issuance and renewal fees at Rs50,000 and Rs25,000 respectively.

The account opening process will be conducted online as per the digital onboarding framework approved by the SECP, and the brokers will be able to provide trading services to its customers, exclusively through online modes.

The regulator has brought in the concept to expand market outreach and promote digitalisation of financial services.

“The new class of Online Only brokers aims to encourage new participants to commence brokerage business at lower preliminary infrastructure and operational costs by using electronic means only,” said the SECP.

The introduced facility was in line with international best practices to offer a complete digital experience to investors who would have the convenience to trade in stock market and make investments and divestments decisions without having to physically visit a brokerage office or branch, it added.

Pakistan Stock Exchange shall also issue the Trading Right Entitlement Certificate to these online brokers at reduced rates along with minimal documentation requirements.

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 regulator stated that the Online Only Broker would operate as a sub-category of Trading Only (TO) brokers – a class of brokers authorised to conduct trading only and the professional clearing member or trading and clearing brokers execute the trades and also keep custody of securities or money owned by the customers of TO brokers.