The Securities and Exchange Commission of Pakistan (SECP) Tuesday conveyed to the brokers' community that the new brokers' regime aims to ensure that custody of customers' assets is only allowed to brokers with sufficient capacity to meet the requisite level of compliance, particularly related to Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT).
The SECP sources told Business Recorder that the new regime would create a structure in line with best international practices which will improve governance standards and transparency and will also enhance investor protection.
The new regime provides the brokers with small capital to reduce compliance burden, transfer their custody function to institutes with adequate capacity and focus on their core competence of trading n investment advice.
Currently well capitalized brokers who have higher governance standards have market share exceeding 90 percent and they are supportive of these regulations.
In order to avoid concentration risk, appropriate controls have been envisaged in the shape of stringent credit rating, limit on asset custody, auditor quality, high equity, strong corporate governance structure, more frequent inspection etc. Before issuing draft regulations, these were circulated and consultations were made with all stakeholders, the SECP officials added.
Securities and Exchange Commission of Pakistan (SECP) has asked brokers community to ensure submission of their comments on the new brokers' regime within 14 days of placement of draft amendments on the website of the Commission.
The SECP has given very limited time period of only 14 days to the brokers to submit comments on the entire changes in the new brokers' regime.
According to the SECP's SRO 26 (I)/2020, the draft amendments to the Securities Brokers (Licensing and Operations) Regulations, 2016, proposed to be made by the Securities and Exchange Commission of Pakistan, in exercise of powers conferred by section 169 of the Securities Act, 2015 and section 114 of the Futures Market Act, 2016, are hereby published for the information of all persons likely to be affected thereby and, as required by subsection (4) of the said section 169 and subsection (4) of the said section 114, notice is hereby given that objections or suggestions thereon, if any, may be sent to the Commission within 14days of placement of draft amendments on the website of the Commission.
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