KARACHI: In a move to attract small investors who shy away from stock investing partly because of excessive documentation, the Pakistan Stock Exchange (PSX) has “further simplified” the brokerage account-opening procedure.
In a brief note on Thursday, the national bourse said it has made a “significant reduction” in the number of data fields required for customer on-boarding.
As a result, the updated Sahulat KYC (know-your-client) and account-opening forms now require only identity details, address, income level, profession, source of income and bank account information.
Launched in April 2022, the Sahulat Account lets small retail investors buy and sell shares on the PSX by opening a basic account with a brokerage house after submitting their computerised/smart national identity cards.
All licensed securities brokers are now offering Sahulat Accounts, which can be opened online as well.
Unlike traditional brokerage accounts, investors don’t have to submit any specific evidence for their source of income for opening Sahulat Accounts. In other words, brokers won’t require salary slips or bank statements from potential stock market investors if they choose to open this kind of brokerage accounts.
Any individual identified as “low risk” through risk assessment can open a Sahulat Account. The securities broker may apply simplified due-diligence measures, which include the verification of the identity of customers.
Despite being as old as the country itself, the stock exchange has an extremely low investor base. The number of individual accounts was only 290,316 at the end of July 2023. The number of accounts held by institutional investors and “funds/others” totalled 1,803 and 1,285, respectively.
For context, the number of crypto wallets — which hold the keys to investors’ digital coins stored on public blockchain networks — in Pakistan hovers around 10 million despite a big question mark on their legal status.
The low number of retail investors means companies as well as the government face difficulty in mobilising public funds in a cost-efficient manner.
The general public tends to park their money with banks, which lend mainly to the government that, in turn, uses those funds to finance its budget deficit at a high interest rate.
Published in Dawn, November 3rd, 2023
