An applicant for a license as a securities broker shall ensure ongoing compliance with minimum paid-up capital and net worth of Rs 35 million and net capital balance of Rs 5 million, according to financial resource requirements laid down by Securities and Exchange Commission of Pakistan (SECP).
The Securities and Exchange Commission of Pakistan (SECP) has prescribed financial resource requirements for new securities brokers intended to obtain license through SRO 77(I)/2018 to amend Securities Brokers (Licensing and Operations) Regulations, 2016. Under the regulations, the existing securities brokers, who are non-compliant with the said prescribed financial resource requirements in respect of paid-up capital and net worth as of December 31, 2017, shall comply with these requirements latest by June 30, 2019. Provided further that in case of securities brokers, who do not meet paid up capital and net worth requirements as prescribed as of December 31, 2017, the Commission may impose other conditions including reduced custody limits, till such brokers are compliant with the requirements as prescribed.
In case a securities broker fails to meet the minimum paid-up capital and/or net worth requirements, the securities exchange shall immediately restrict the trading facility of such securities broker and its license shall be suspended by the Commission without prejudice to any other disciplinary action under the Act and the Futures Act and these regulations. 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 an audited statement of net capital balance on half yearly basis, the SECP said.
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 submit audited statement of liquid capital on half yearly basis, 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 audited statements of net capital balance shall be discontinued.
A securities broker shall immediately notify the Commission and the securities exchange if the net capital balance and/or the liquid capital fall below the specified threshold and shall immediately submit the revised net capital balance and/or liquid capital calculations.
In case of non-submission of statements of net capital balance and liquid capital within a time period as may be notified by the exchange, and clearing house or any shortfall in the net capital balance and/or liquid capital, either reported by the securities broker or identified by the securities exchange, clearing house or the Commission, the securities exchange, and clearing house shall immediately restrict the trading facility of such securities broker and shall only allow it to close out the open position in a controlled environment.
The net worth of a securities broker shall be calculated as total assets less total liabilities less surplus on revaluation, if any, created upon revaluation of fixed assets.
Provided that the Commission may issue clarification in respect of treatment of any item of assets and/or liabilities for the purpose of calculating the net worth of a securities broker, the SECP added.
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