Futures Brokerage Licence

What an SECP futures-broker licence authorises

Futures brokerage is regulated by the Futures Market Act, 2016 ↗ and the Futures Brokers (Licensing and Operations) Regulations, 2018, updated through 12 December 2025 ↗. Regulation 3 prohibits acting as a futures broker without an SECP licence. Incorporation, a Pakistan Mercantile Exchange (PMEX) trading-right entitlement certificate (TREC), and an ordinary securities-broker licence are separate from the futures-broker operating licence.

The normal sequence is SECP prior permission, PMEX TREC, incorporation, SECP licence application through the exchange, and an exchange pre-commencement readiness visit. Regulation 4 permits a person already holding a valid securities/futures-broker licence under the Securities Brokers (Licensing and Operations) Regulations, 2016 to seek the futures-broker licence without the otherwise required prior permission; the remaining eligibility and operating requirements continue to apply.

Applicants must choose between the ordinary category and Agri-Only, which is confined to futures contracts on local agricultural commodities including eligible electronic warehouse receipt contracts. This classification affects corporate form, competence, minimum net worth and fees. A technology platform or agriculture-focused business does not qualify automatically: its contracts, exchange rights and licence must match.

Eligibility, ownership, capital and fitness

Applicant and sponsors. Regulation 4 requires a company whose memorandum and articles permit futures brokerage, with a valid TREC. A standard broker cannot be a single-member company, while the Agri-Only category has an express exception. Identified sponsors ordinarily retain at least 51% of shares (25% for a listed company) and at least 20% board representation. Sponsors and the applicant must not control another licensed futures broker. Sponsor transfers require assessment of the rule and its exception for transfers among existing identified sponsors.

Fit-and-proper. Annexure B applies to the applicant, sponsors, directors and senior management. It addresses financial soundness, overdue loans, insolvency, regulatory history, tax compliance and competence. Regulation 4 includes ultimate beneficial owners controlling 10% or more. Foreign nationals have a specific exception to the FBR active-taxpayer criterion in Annexure B; other requirements still apply. The CIB provisions distinguish outstanding amounts under litigation and subsequent clear reports, and contemplate an opportunity to make representations. Disclose actual facts rather than treating every historic banking dispute as automatic rejection.

Competence after the December 2025 amendment. At least one director must meet the Annexure B professional or education route and ordinarily five years of relevant experience. A fully digital technology-enabled Agri-Only applicant has a specified three-year route. The CEO normally needs a recognised professional qualification or 16 years of education in a prescribed field and five years of relevant senior-management experience. Agri-Only has a conditional route involving 12 years of formal education and IFMP Commodity Brokers' certification. The compliance officer has a separate education/professional route and three years' relevant experience. A seven-year relevant-experience provision relaxes certain minimum educational qualifications; it does not erase fitness or experience scrutiny. Review Annexure B itself before accepting a job title as evidence of qualifying senior management.

Net worth. Regulation 7 requires an ongoing minimum of PKR 10 million for an ordinary futures broker or PKR 5 million for Agri-Only. Net worth is calculated from assets less liabilities and any fixed-asset revaluation surplus, not merely stated paid-up capital. Exchange collateral, deposits and operational funding may be additional.

Application evidence and prescribed forms

Prior permission: Form A and Annexure A. Prepare sponsor and proposed director identities, addresses, occupations and nationality; the proposed CEO and chairman; ten-year record of relevant offices; education, professional experience and financial standing; proposed sponsor contributions; feasibility report; bankers; draft memorandum and articles; and sworn statements addressing misconduct, tax and financial defaults. Institutional sponsors provide the corporate information and other evidence applicable to them. Signed declarations should match the bank and tax documents.

Licence: Form A-I and Annexure A-I. Assemble the certificate of incorporation and certified constitutional documents, applicable company returns/forms or current SECP electronic equivalents, sponsor pattern and TREC particulars, registered-office details, ownership and management profiles, regulatory-proceeding disclosures, evidence of the required net worth, financial statements where applicable, bank statements for the prescribed period, prior-permission order where required, and outsourcing contracts. Annexure A-I calls for details of planned computer systems, data-processing capacity, personnel and premises. It does not authorise applicants to misstate planned infrastructure as already installed.

Operational documentation. Prepare customer onboarding, KYC and AML/CFT/CPF, risk profiling, suitability, risk disclosure, complaints, conflicts, order and settlement controls, customer-asset reconciliations, internal audit, compliance monitoring, business continuity and information-security arrangements. Identify the accountable officer and retain evidence of system testing and the exchange's actual requirements. A bare policy index is not evidence of operating readiness.

Applicant-specific variations. An existing licensed securities/futures broker invoking the prior-permission exception needs proof of the qualifying licence. Agri-Only applicants should document the agricultural-contract limitation and any special education route. Foreign owners or directors should check identity authentication and applicable approvals. A newly incorporated applicant should not invent three years of audited accounts where the annexure qualifies historic financial statements as applicable.

SECP Futures Broker Checklist, July 2025 ↗ is an administrative aid. The later December 2025 enacted amendment controls any inconsistent earlier qualification wording.

How to apply: the legally prescribed sequence

1. 01
   Determine the category and screen eligibility

   Choose ordinary or Agri-Only and verify the proposed contracts, sponsor shareholding, director/CEO/compliance qualifications, minimum net worth, group conflicts and exchange entitlement. Decide whether the regulation 4 prior-permission exception applies to an already licensed broker; document that legal basis before filing.

2. 02
   Obtain prior SECP permission where required

   Under regulation 5 submit Form A with Annexure A before acquiring the PMEX TREC. SECP may request further evidence. Permission is valid for six months; in special circumstances sponsors may apply before its expiry for a maximum three-month extension. These are permission-validity periods, not a guaranteed SECP decision time.

3. 03
   Secure PMEX trading rights and incorporate

   Within the permission window, obtain the TREC and incorporate the company with constitutional objects and ownership matching the proposed licence. Exchange charges, collateral and admission requirements are separate from SECP licensing fees. Verify current PMEX instructions rather than assuming an older TREC process is unchanged.

4. 04
   File the operating-licence application through the exchange

   Regulation 6 requires Form A-I and Annexure A-I with the non-refundable Schedule I application fee. PMEX scrutinises and verifies the file, forwarding certified materials and a recommendation to SECP. The recommendation covers management fitness, capital, technology, trading/settlement, complaints, conflicts and AML controls.

5. 05
   Answer SECP observations and record changes

   SECP may seek clarification, a board-authorised representation or an inspection. Regulation 6(6) requires a change to information submitted with the application to be reported to SECP within five working days. Maintain an observation register and dated evidence of corrected submissions.

6. 06
   Licence grant and pre-commencement inspection

   SECP may grant a one-year licence in Form B, with conditions. Under regulation 8(4), the exchange must, within three months of grant and before allowing commencement, confirm professional management, trading and settlement systems, compliance, risk controls, KYC and customer suitability by visiting the premises. Licence grant is not permission to bypass that exchange readiness step.

7. 07
   Apply for renewal before expiry

   Regulation 9 requires Form C through the exchange, ordinarily 30 days before expiry, with the compliance undertaking and renewal fee. A timely filed application pending SECP decision is addressed by regulation 9(5); do not assume late filing receives the same treatment.

Official sources: regulations 4–9, Forms A/A-I/C, Annexures A/A-I/B ↗ · SECP checklist ↗.

After approval: continuing regulatory obligations

Maintain the licence, PMEX TREC, prescribed net worth and ongoing fit-and-proper status. Annexure B requires a person subject to fitness criteria to notify relevant changes to the company secretary within three business days, with the broker then reporting to SECP and the exchange within seven business days. This is separate from the five-working-day change rule for a pending application.

Regulations 13 and 17 require risk disclosure and proper customer account opening. The December 2025 amendment permits verifiably authenticated electronic, online or digital acknowledgment of risk disclosure. Regulations 16 and 26 address internal controls, customer-asset reconciliations, complaints and investor protection. Complaints should ordinarily be addressed within 30 days, with quarterly exchange reporting of complaint statistics. Compliance reports go to the board quarterly under regulation 27, with immediate escalation of non-compliance.

Regulation 16 requires operationally independent internal audit and compliance functions and contingency planning, including biannual testing unless SECP prescribes another interval. Regulation 29 generally requires accounting and transaction records for at least ten financial years, with an audit trail from order initiation to settlement. The broker must also observe current AML/CFT/CPF requirements and applicable exchange rules.

Cancellation and exit are regulated. Under regulation 11, customer notification, settlement of dues and claims and exchange confirmation are relevant to cancellation; a company easy-exit filing alone does not cancel a futures-broker licence. Monitor suspension, TREC loss and expiry risks separately.

SECP fees, net worth and statutory periods

Schedule I lists the SECP licence-application fee at PKR 100,000 for an ordinary futures broker and PKR 50,000 for Agri-Only. Renewal fees are PKR 50,000 and PKR 25,000 respectively, plus applicable collection charges. These figures exclude PMEX TREC fees, exchange collateral, incorporation costs and professional fees. Confirm the designated payment account and any later effective fee change before remittance.

Regulation 7 requires ongoing net worth of PKR 10 million or PKR 5 million respectively. The prior permission under regulation 5 lasts six months, with a possible further three months in special circumstances. A licence is generally for one year; regulation 9 requires renewal 30 days before expiry. None of these rules establishes a guaranteed application-processing time.

Governing law and regulator references

The Futures Market Act, 2016, and Futures Brokers (Licensing and Operations) Regulations, 2018 (as amended through 12 December 2025) govern this licence. The Companies Act, 2017 and Companies Regulations, 2024 govern the separate corporate filings. PMEX rules and SECP AML/CFT/CPF requirements apply in addition. No licence is guaranteed by satisfying a checklist; SECP retains the statutory decision-making role.

How Chambers can assist

Chambers can review the legal route, identify regulatory constraints, prepare or review the supporting corporate and legal documents, manage the prescribed submission and correspond with the competent authority where instructed. The scope of the engagement will be determined by the applicant’s particular circumstances.

For an initial enquiry, identify the proposed activity, applicant entity and current stage, and provide the available documents indicated above. Please avoid sending confidential or identity-sensitive records through an unencrypted first contact.