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Paid-up capital requirement proposed for brokerage houses – Alfalah Securities Limited

Karachi: Securities and Exchange Commission of Pakistan (SECP) has proposed paid-up capital requirement of up to PKR 400 million for brokerage houses within 3 years.

According to Alfalah Securities Limited, this paid up requirement would not include the value of KSE membership card.

The proposal for brokerage houses has the following salient features:

• Only corporate entities with minimum prescribed amount of paid-up capital will be eligible to act as an intermediary.

• Majority shareholders and directors would be required to deposit their shares representing ownership with CDC in a blocked account.

• The sponsors/directors will have to declare assets owned by them at the time of registration while they would also be required to have at least 20% representation on the Board of Directors.

• The individual company/group will be prohibited from holding beneficial ownership of more than one brokerage house.

• Every brokerage house will be required to maintain positive equity at all times, which shall not be less than the paid up capital amount in any case.

• The corporate brokerage house would be required to maintain liquid capital as prescribed by the Commission.

• If a brokerage house intended to operate at any other location, the brokerage house would need to open a branch office at that location.

The adoption of new broker registration regime is meant to improving the image of the Pakistani capital markets by adhering to International Organization of Securities Commissions (IOSCO) principles relating to market intermediaries.

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