SECP issues guidelines for brokers


The Securities and Exchange Commission of Pakistan has issued guidelines for stock exchange brokers to ensure a consistent approach while complying with the regulatory requirements of Securities and Exchange Rules, in calculating and reporting Net Capital Balance (NCB).
According an SECP statement on Tuesday, the commission conducts inspections of the brokers of the stock exchanges in order to protect investors’ assets, to foster principles of good governance and to ensure that proper risk management procedures are in place in the capital market.
It said during on-site inspections of the brokerage houses, it had observed that requirements prescribed in the Third Schedule of SEC Rules for preparing NCB were being interpreted differently by the brokers and auditors.
Moreover, inconsistency has also been observed on the part of auditors with regard to format for certification of NCB, the SECP added.
The SECP said it deemed it appropriate to issue certain clarifications to ensure clarity and consistency including treatment regarding new products and their resultant impact upon NCB.
Accordingly, in light of the queries and suggestions received from different market participants from time to time, guidelines have been issued with respect to Third Schedule read with Rule 2(d) of the SEC Rules including certification of NCB under the regulatory framework, it added.
The commission reiterated its commitment for development of efficient capital market and sound regulatory principles through responsive policy measures and effective enforcement practices.