ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) amended the Pakistan Stock Exchange Limited (PSX) Regulations on Thursday in a bid to introduce stringent eligibility criteria for opening of new offices/branches by brokers.

The amendments, finalised in a meeting chaired by Chairman SECP Shaukat Hussain, aim to get PSX to instill stronger mechanisms for investor protection.

Earlier, apart from the procedural and operational requirements there was absence of checks on brokers’ compliance history and track record.

The regulations now require that any broker opening a new office/branch office must have an impeccable track record and compliance history in dealing with complaints and arbitration awards up to the satisfaction of the regulator.

The broker must also have no significant disciplinary action against it by the SECP, PSX or the Central Depository Company (CDC) during the last three years for any material violations in relation to misuse or unauthorised use of customers’ assets or improper segregation of customers’ funds.

The amendments also require that any sponsor, director or senior management officer of the broker has not been engaged in the capacity of sponsor, director or senior management officer with any other broker declared defaulter by the PSX or NCCPL or whose TRE Certificate has been forfeited or cancelled by the exchange due to non-compliance of any applicable rules, regulations, notices, procedures, guidelines, etc.

The amendments also require periodic offsite monitoring of the offices/branches of securities brokers by the PSX and empower the exchange to take further appropriate actions in case of any violation/non-compliance of the regulations.

The compliance officer of the broker has been obligated to confirm to the exchange on a bi-annual basis that the office or branch office of the broker is/are in compliance with the applicable regulations of SECP and PSX. In case of any non-compliance, the compliance officer shall report the same to the broker, exchange and SECP.

Most importantly, the revised regulations now require PSX to visit the brokers’ office prior to granting certificate of registration to confirm that the office/branch office fulfils the regulatory requirements including sufficient infrastructure, appropriate number of qualified personnel, sufficient systems for transmitting clients’ records to head office and the additional eligibility requirements mentioned in the regulations.

Published in Dawn, August 17th, 2018