ISLAMABAD: The Secur­ities and Exchange Commission of Pakistan (SECP) has allowed the stockbrokers to provide advisory services without obtaining any licence, but forbade them to receive any charges for this service.

The regulator on Friday notified the amendments to the Securities and Futures Advisers (Licensing and Operations) Regulations, 2017 by accepting the demands of the stockbrokers to make the advisory regulatory regime practicable and conducive.

The SECP has said that the rationalised licensing regime for securities brokers coupled with other SECP measures would definitely contribute to reducing regulatory burden and the cost of doing business for capital markets, ultimately promoting the ease of doing business.

Earlier, it was mandatory to obtain advisory licence even for the stockbrokers. The new regulations allow the stockbrokers to provide securities advisory to their customers, without receiving any separate compensation for it.

The stockbrokers have also been permitted to distribute units of mutual funds and voluntary pension funds of multiple asset management companies (AMCs).

Under the new regulations, the advisory regime has been segregated into two segments: one includes advisory with portfolio management to be governed under the non-bank finance companies (NBFC) scheme whereas advisory with distribution of units of mutual funds.

The other segment includes voluntary pension funds of multiple AMCs to be dealt under the amended Securities and Futures Advisers (Licensing and Operations) Regulations, 2017.

The SECP said that in view of the local conditions related to capital market, it has been decided to grant licences only to corporate entities for undertaking any regulated activity in the capital markets and such a licence would not be issued to any individual.

Apart from the stockbrokers, entities registered under the Companies Act for the purpose of providing advisory and distribution of Collective Investment Schemes and/or Voluntary Pension Fund units of multiple AMCs as well as the banks are eligible to benefit from the new policy.

At the same time the regulations have detailed and strict codes over the issues of ‘Conflict of Interest’ and ‘Confidentiality’.

They also permit banks to distribute units of mutual and voluntary pension funds of multiple AMCs with the view to broaden the investor base.

However, this permission to the banks is subjected to certain regulatory requirements.

The deadline to obtain licence has been extended to June 30, 2018, so that the existing distributors can avail the facility.

Published in Dawn, February 24th, 2018