The primary function of brokerage firms is to facilitate a business transaction by connecting buyers and sellers through their intermediary network. Typically, these companies are compensated with commissions or fees that are levied after the transaction is concluded. Nowadays, the exchange or customer, or both, may pay the compensation.

The implementation of zero-commission trading by numerous discount brokerages helps them compensate for revenue loss in other areas, such as being paid by exchanges for larger order flows. When a trade order is made for X amount to the brokerage company paying a ‘transaction fee,’ an investor pays when they attempt to complete the trade.sht.

Real estate operates under a brokerage company model, whereby real estate brokers typically work together to broker, with each company representing at least one party to the transaction. Both brokerage companies distribute the commission in this scenario. Sometimes, a brokerage firm is called merely “broker”, and sometimes it is simply “Broker.” It is possible for brokers to be part of a brokerage firm or to operate as independent agents.

Asset Management Companies Rules 1995

The Federal Government has the authority to establish regulations that govern Asset Management Companies.

The shares of a company and their stocks.

A company’s debt securities, such as debentures, issuance stock and notes, loan stock or notes; any instrument that creates indebtedness for the company; and any other types of debt instruments issued by the same company.

The creation of indebtedness by bonds, loan stocks, sukUK and other instruments (Government and public debt securities) is possible.

Modaraba certificates, participation term certificates and certificates of finance;

Any authorisation (by warrant or otherwise) to purchase shares or debt securities (warrants);

Options, collective investment schemes (either open-ended or closed-end); units in trust funds; any security that can be purchased or disposed of.

Rights derived from depository receipts of shares, debt securities, and warrants issued as custodial receipts. And the like.

If the Commission identifies another mechanism as securities for this Act.

Who is a Securities Broker?

The role of a securities broker is to connect the buyer and seller, serving as essentially an intermediary between them and the world’s financial markets. During trading, securities brokers assist clients in selling and buying stocks, bonds, etc. Securities brokers typically provide information to potential clients on their securities services and assist with the purchase or sale of specific securities. Their responsibility is to observe the financial markets and the performance of individual securities.

Trading Rights Entitlement Brokerage Company Certificate

Anyone who wants to work as a securities broker must apply for the Trading Rights Entitlement Certificate (TREC). TRE Certificate Application Form, the Pakistan Stock Exchange, must be signed by the applicant(s) who intend to apply for the TREC. A certificate is issued to the applicant upon approval of the application by the CEO of the Pakistan Stock Exchange. Until 2025, the Pakistan Stock Exchange is required to issue fifteen (15) TRE Certificates annually as per the provisions of the Shares (Corporatisation, Demutualisation and Integration) Act 2012.

Time Period

The application form must be completed and signed by the applicant within sixty (60) days of its release. The period of 30 days from submission of an application to the Pakistan Stock Exchange is used to reject the application.

Process Fees

To grant the new TRE Certificate, all required amounts must be paid for. 2.5 million. An amount of one million is included in the application processing fee, which must be paid in Rs. only. 100,000/-

A payment in favour of the Pakistan Stock Exchange is required when paying the Application and paying a fee.

Eligibility Criteria

The company that is applying has to be either a company or a Private company. It can not be a company that has one member; it has to be a Public company or a Private company.

The company needs to have a minimum of fifty million rupees as its issued and paid-up capital. The company must have this amount of money. The issued and paid-up capital of the company has to be at least fifty million rupees.

The Chief Executive of the applicant company must be a citizen of Pakistan and should not be on the board of any other company whose principal activity is investing/ trading in the securities market.

The main people in charge of the company that is applying have never been directors or big shareholders in any company that was in trouble with the Exchange. This includes companies that had a TRE Certificate or were Members and were either kicked out or had their TRE Certificate taken away by the Exchange before the company became demutualised. A big shareholder is someone who owns more than 10 per cent of the company.

The company that is applying needs to haveat least two Directors, including the Chief Executive, who have a degree from a university that the HEC says is okay. This degree should be a graduation degree. If the degree is from a university, it should be of the same level. These Directors should also have been working in the business of buying and selling securities for at least five years. The company needs to make sure that its Directors have this experience so they know what they are doing when it comes to securities. The Chief Executive and the other Directors must have this graduation degree and this experience of five years in the securities business.

The company that is applying must only do work as a Broker. They cannot do any kind of business. The company has to be a Broker and nothing else.

A company that wants to apply will not be given a TRE Certificate if any of the people who manage the company:

People who have been declared bankrupt or are insolvent, even if they have been given a discharge, are in a tough spot, as the companies that they owe money to these people have been declared bankrupt or have been shown to be insolvent.

Application for Securities Brokerage Company License from SECP

Procedural Details

 Once the Certificate has been obtained, the applicant company can then apply for a securities license from the Securities & Exchange Commission of Pakistan (SECP) by sending an application with the required documents to the Pakistan Stock Exchange.

Specifications and evidence needed for the application: 

1. General information: What is a brief history of the applicant company, including its name, incorporation date, date of establishment, contact information for key management staff, group structure, if any, and duration of employment asan eminent securities broker.
2. The registered office of the applicant’s residence (postal address, postal code, telephone number, fax numbers)
3. Which contact details are required for the applicant’s company to reach them? (e-mail address, phone number, fax machine, and email)
4. The contribution percentage of each sponsor to the company’s capital.
5. TRE Certificate number and the name of the securities exchange in which the applicant is applying.
6. The Commission or any other regulatory body may have legal proceedings against the applicant, its directors, or senior management officers that are still pending. Provide details.
7. Information provided if the applicant, its sponsors and directors, major shareholders or senior management officers have been declared insolvent/bankrupt or defaulter by any authority. Additionally, information regarding these issues is available upon request.
8. The Commission or any other regulatory authority may have committed or carried out penal actions against the applicant, its sponsors, directors, major shareholders, or senior management officers in the last three years.
9. If the applicant’s associated company is already licensed under the Securities Act, 2015, details will be provided below:

• Name of such associated company;
• Details of warning notices issued to this associated company by the Commission, if any;
• The Commission or any other regulatory body may file legal action against a related company, including details of any such actions.
• In the past three years, the Commission has imposed any possible penalties against this associated company.

1. Facts about infrastructure (to be used in carrying out functions of a securities broker):
2. Hardware Configuration of the computer and software used are listed in the installation.
3. Data processing and communication capabilities are determined by available infrastructure, manpower, and office space.
4. Other Information
5. The following is the format for all pending disputes in which the applicant is a party: (a) Name of the party; (b)Name and address of court/tribunal where the dispute is heard;(c)Mass involved;[d] Pending since; [d); Date of last hearing; And (g)Last hearing conclusion.inf).
6. List all the civil and criminal acts committed by the applicant, its sponsors or directors, or senior management officers, within the last three years. Additionally,

• Any further information of concern for the business of the securities brokers.
• Any major awards or recognition, or collective complaints against the candidate.
• Information needed to submit the application:
• The applicant company’s memorandum and articles of association must be certified by the CRO, along with a copy of the certificate for incorporation and the commencement of business.
• Official certificates from the CRO concerned, along with copies of Forms 3, 27, 28, and 29 submitted by the applicants.
• Audited accounts for each of the last three years, as well as their half-yearly and quarterly reports (if any).
• Materials presenting evidence of compliance with the financial resources required under the Securities Brokers (Licensing and Operations) Regulations, 2016.
• The essential managerial documents for the applicant are the Company’s Profile / Fit and Proper documents.
• A promise from the sponsors of the applicant company to refrain from selling or transferring their shares without seeking approval from the securities and exchange.
• An agreement between the directors and the applicant to notify the Commission if there is any change in the sponsors/majority shareholders of the sponsoring company.
• The identities and particulars of any enterprise operated by individuals possessing a 10% or greater share in the securities broker’s issued stock capital.
• Each sponsor’s ownership of shares.
• The securities broker’s financial information.
• Information regarding outsourcing agreements and their affiliations (if any).
• The Commission may require any additional information or document….
• The Pakistan Stock Exchange will review and then forward the application to SECP for further consideration and approval. If an application is granted by the Securities and Exchange Commission of Pakistan, the SECP grants a license to the Pakistan Stock Exchange for the respective TREC holder.
• Along with these documents, Undertakings, Fit and proper Criteria, and BrokerChecklist must also be included.

Fee Schedule

1. [See regulation 5(1) and 9(1)].
2. A licence for a securities broker that is renewed with remuneration of Rs.50,000 is required.
3. In order to obtain a fresh licence as a staking broker, one must pay Rs. 100,000.00.
4. The Commission’s bank account can receive the fee payment. How does one go about doing this?
5. The duration of the securities broker license is one year.