Karachi March 21 2025: The Pakistan Stock Exchange Limited (PSX) has issued an investor alert, advising caution to those who authorize others to execute trade orders on their behalf with securities brokers.
The advisory aims to ensure that investors take necessary precautions and consider key factors before delegating their trading authority.
Guidelines on Authorized Individuals
PSX recommends that investors should preferably authorize individuals they personally know and who possess relevant qualifications, experience, and a sound understanding of market dynamics. The selected individuals must be trustworthy and align with the investor’s financial objectives and risk tolerance.
While a family member is the preferred choice, investors may also appoint an unaffiliated third party. However, they are cautioned against appointing individuals through social media or those who promise guaranteed or exorbitant returns with minimal or no risk. Additionally, PSX clarifies that an authorized person cannot be a representative of the securities broker due to potential conflicts of interest and regulatory restrictions.
Key Considerations for Investors
Before delegating trading authority, investors should:
• Ensure a proper agreement is signed and dated by both parties.
• Provide a copy of the agreement to the securities broker, along with the authorized person’s credentials, such as CNIC, contact details, and any additional documentation required by the broker’s policies.
Investor Responsibilities and Risk Management
Investors are reminded that they remain responsible and liable for all transactions executed by their authorized individuals. PSX warns that granting such authority carries inherent risks, including misuse and conflicts of interest. To safeguard their investments, investors should:
• Regularly monitor their trading activity and review quarterly account statements from their brokers.
• Promptly report any discrepancies or suspicious activities to their authorized person, securities broker, or relevant authorities.
• Stay informed about securities market regulations to mitigate legal and financial risks.
Revocation of Authorization
Investors have the right to revoke the trading authorization at any time. They must notify the securities broker in writing to ensure immediate restriction of access for the authorized person. Until such revocation is officially communicated, any trades executed by the authorized individual will be considered legally binding.
PSX reiterates that investors must remain vigilant and take all necessary precautions to protect their financial interests. The exchange urges investors to act responsibly and ensure that all trades executed in their accounts remain within their knowledge and control.
