Karachi November 9 2023: Pakistan Stock Exchange (PSX) introduced one-window digital paltform "Online Only" securities broker on the exchange as a digital platform for entrepreneurs.
PSX is committed to supporting innovation in the Securities market in view of the growing demand for digital/online investing platforms. In this regard, the Online Only Broker (being a sub-category of Trading Only) has been introduced on the Exchange as a digital platform for entrepreneurs. Under this new category, the customer onboarding process and broker’s trading services will be conducted only through the online channels. Furthermore, the lower financial resource requirements and entry costs make it an ideal choice for those looking for a cost-effective way to offer brokerage services.
The Online Only Broker is a one-window digital platform enabling any public or private company including a ‘Single Member Company’ to provide brokerage service as an Online Only Broker. Whether you are a start-up, fintech, or an entrepreneur, you can avail this opportunity to benefit from a new and diverse revenue stream by procuring an Online Only Broker license which requires no expenditure of time and minimal amount of money for back office operations. The Online Only Broker license entails low financial requirements and operational costs with no need for a physical office. With this license, the Online Only Broker can execute trades in Ready or Future Markets only through online or electronic means providing customer onboarding, trade execution and support services, thereby enhancing your outreach for onboarding customers and facilitating them with minimal overheads.
Online Only Broker – Key Features:
- Fully digitized platform for provision of brokerage facilities
- All public or private companies including a ‘Single Member Company’ may apply to SECP for a license to be onboard as an Online Only Broker
- No need for a physical office, head office or branch
- Trading permissible in Ready or Futures Markets only
- No Statutory Audit requirement by an Auditor of category ‘A’ or ‘B’ as per the SBP Panel of Auditors
- All customers will be connected through a designated online mode for account opening, trading and reporting
- Trading facilitated for customers without human intervention on part of the Online Only Broker (refer Chapter 9 of the PSX Rule Book)
- Online Only Broker may open Customer Facilitation Center (CFC) (refer Chapter 22A of the PSX Rule Book)
- Exemption from Clients’ Assets Segregation reporting which is applicable on other broker categories on a fortnightly & annual basis
Online Only Broker – Requirements
- Procure a license from SECP for brokerage business as an Online Only Broker
- Procure TRE Certificate form PSX (Ref: PSX Notice No. 303 dated March 24, 2023)
- Appointment of a Clearing Member i.e. PCM or T&C
- Online Only Broker shall not be allowed to do proprietary trading
- Maintain adequate systems infrastructure including functional website, internal control procedures and technology to facilitate Internet Based Trading Services (IBTS) in an effective, efficient and robust manner on an on-going basis
- Maintain well-defined procedures for allowing clients’ access to IBTS covering the following aspects:
- Assigning trading limits
- Placement and execution of clients’ orders
- Mode and timing of reporting of trade confirmations to clients
- Margin requirement and margin calls
- All other requirements as mentioned in chapter 9 of PSX Rule Book
Online Only Broker – Monetary Aspects
- PSX Trading Right Entitlement Certificate (TRE) fee - Rs 1.25 million (One time only)
- Minimum net worth requirement – Rs 7.50 million (maintenance required at all times)
- Base Minimum Capital (BMC) (Regulation 19.2 of PSX Rule Book) – Rs 1 million (deposited with PSX; maintainable at all times)
- Liquid Capital requirement – Not Applicable
- Licensing fee for SECP – Rs 50,000 and Annual Renewal Fee – Rs 25,000
- Trading & IT Charges – (refer Standard Schedule of Charges placed on PSX website)
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