Securities Brokerage Licence

Securities brokerage: licence and exchange entitlement

Operating a securities brokerage in Pakistan requires more than incorporating a company or obtaining an exchange terminal. The Securities Act, 2015 regulates the business, and regulation 3 of the Securities Brokers (Licensing and Operations) Regulations, 2016 prohibits acting as a securities broker without a licence from the Securities and Exchange Commission of Pakistan (SECP). The Pakistan Stock Exchange (PSX) Trading Right Entitlement Certificate (TREC), company incorporation, SECP licence and operational commencement are separate milestones. Each must be assessed before soliciting clients or executing their orders.

The applicable framework includes the Securities Act, the Securities Brokers Regulations as amended through 8 April 2024, PSX exchange rules, clearing and central-depository requirements, and applicable anti-money-laundering and investor-protection obligations. Regulation 5 provides for submission of the licence application through the exchange, which scrutinises the file and makes a recommendation to SECP. A TREC alone does not constitute a brokerage licence.

This guide concerns securities brokerage on PSX. Commodity futures brokerage has a different licensing framework; securities advisory, underwriting and other regulated services cannot automatically be carried on under a basic securities broker licence. Define the intended business and product range before selecting the licence category.

Who can apply, and which category is appropriate?

Regulation 5A distinguishes Trading Only, Online Only, Trading and Self-Clearing, and Trading and Clearing. Trading Only is primarily an execution category and does not ordinarily permit customer clearing and custody. Online Only is a Trading Only subcategory for electronic execution and does not permit an ordinary office-based brokerage offering or proprietary trading, subject to the regulation's limited exceptions. Trading and Self-Clearing permits execution, clearing and custody of the broker's own and customers' trades. Trading and Clearing additionally covers clearing and custody for other brokers under the prescribed conditions. The choice affects systems, staff, custody permissions and capital.

PSX requires TREC applicants to be public or private companies. Regulation 4 generally excludes a single-member company, except in the Online Only category. The company's memorandum and articles must authorise the proposed regulated activity. Sponsors, directors, chief executive and senior management must meet the fit-and-proper criteria and applicable experience, financial-standing and certification requirements. Sponsor control and overlapping interests in other licensed brokers need scrutiny. The chief executive must not concurrently serve as chief executive of another company.

Prior SECP permission under regulation 3A is necessary for the relevant new Trading and Self-Clearing or Trading and Clearing formation route, using Form A-1 and Annexure A-1. The February 2024 amendment expressly excludes Trading Only and Online Only from that prior-permission requirement. A person already holding a valid futures-broker licence has a separate exception in regulation 4. Neither exception removes the need for TREC and the final SECP securities-broker licence.

Regulation 6(1A) in the consolidated text sets minimum net worth of PKR 15 million for Trading Only, PKR 7.5 million for Online Only, PKR 75 million for Trading and Self-Clearing and PKR 500 million for Trading and Clearing. SECP's July 2025 checklist presents the same category figures as minimum equity requirements. These amounts are not licensing fees; financial planning must distinguish net worth, paid-up funding, regulatory capital balance, exchange deposits, clearing margins and operating liquidity. Further conditions apply to clearing and custody categories.

The April 2024 enacted amendments also address Shariah-compliant brokerage, including a controlled subsidiary structure with additional certification, separation of personnel, conflict controls, disclosure and category restrictions. That structure requires a specific compliance analysis rather than merely adding an Islamic label to an ordinary brokerage business.

Prescribed forms and evidence for the application

For prior permission, where required, use regulation 3A Form A-1 with Annexure A-1. For the operating licence use regulation 5 Form A and Annexure A; for annual renewal use regulation 9 Form C. The SECP licensing checklist contains its own annexure labels and application guidance, which must be reconciled with the forms prescribed by the regulations.

• Corporate and TREC: company name, incorporation documents, memorandum and articles, PSX trading entitlement and category, statutory filings, shareholding and sponsor details.
• People and ownership: CNIC or passport, curriculum vitae, qualifications and relevant experience for directors, CEO and compliance officer; ultimate beneficial owners, fit-and-proper affidavits, active-taxpayer evidence and disclosures of other regulated interests.
• Financial capacity: sponsor net-worth evidence, wealth statements or eligible auditor certificates, proof of subscription money, bank accounts, current and historical accounts where applicable, and auditor confirmation of the chosen category's financial threshold.
• Business readiness: business plan, three-year cash-flow forecasts, budgets, proposed infrastructure, clearing/custody arrangements, technology, information security, risk management, customer complaints, conflicts, and AML/CFT controls.
• Conditional documents: foreign sponsor or director passports and authenticated/apostilled evidence, security clearance where required, government-servant NOC, public-sector approvals, pending litigation or regulatory-investigation disclosures, and group-company documents if relevant.

The July 2025 SECP checklist requires more than a generic company-registration file. It calls for an operational business plan and personnel evidence at the applicable formation stage and detailed corporate, financial and technical evidence at the grant stage. Some items apply only to foreign applicants, public-sector sponsors or particular brokerage categories. Obtain the latest checklist before preparing originals or paying a fee.

How to obtain a securities broker licence — practical sequence

1. 01
   Identify regulated activity and brokerage category

   Record who will execute trades, hold customer funds, clear transactions and operate trading systems. Select Trading Only, Online Only, Trading and Self-Clearing or Trading and Clearing; check whether additional regulated permissions are required.

2. 02
   Test sponsor, director and financial eligibility

   Check ownership restrictions, fit-and-proper evidence, active-taxpayer and professional qualifications, capital source, category net worth and operational staffing. Resolve conflicts with other licensed intermediaries before forming the company.

3. 03
   Obtain prior permission if required

   For Trading and Self-Clearing or Trading and Clearing, apply to SECP under regulation 3A using Form A-1 and the prescribed annexure. The permission normally runs for six months, with a possible extension of up to three months on timely application. Trading Only and Online Only are exempt from this stage, not final licensing.

4. 04
   Incorporate and secure PSX TREC

   Complete incorporation and the applicable PSX TREC application. PSX currently publishes a PKR 2.5 million TREC charge, reduced to PKR 1.25 million for Online Only, plus a PKR 100,000 non-refundable processing fee. Confirm current exchange charges before payment.

5. 05
   Submit Form A through PSX

   File the SECP licence application, prescribed corporate and management records, capital evidence, exchange entitlement, operational controls and the Schedule I fee receipt. PSX scrutinises and recommends the file; SECP may request additional information, inquiries or a board-authorised presentation.

6. 06
   Complete regulatory and operational assessment

   Demonstrate trading, risk, settlement, recordkeeping, customer protection, complaints and AML systems. Regulation 5(7) requires notification of changes to information in the pending licence application within five working days. A grant of licence is not the same as permission to begin trading.

7. 07
   Secure commencement clearance

   Under regulation 8, PSX must verify management, systems, organisational structure and settlement arrangements before allowing commencement. PSX states that a new TREC holder should obtain the SECP licence within six months of TREC issuance and commence within three months after licence, subject to the applicable route.

8. 08
   Renew before the statutory deadline

   Regulation 9 requires the broker to apply through PSX by 30 November each year using Form C, a compliance undertaking and the renewal fee. The licence expires on 31 December. The checklist's generic reference to one month before expiry must not displace the express 30 November deadline.

Filing resources: SECP securities broker checklist ↗ and PSX TREC information ↗.

Continuing compliance and protection of customers

A licensed broker must continuously satisfy the category's net-worth and applicable net-capital or liquid-capital requirements, not merely demonstrate them at licensing. Regulation 6 addresses reporting and immediate notification of a shortfall; the exchange may restrict trading where capital requirements are breached. Trading Only and Online Only brokers have different custody and clearing restrictions from the clearing categories. Confirm the current reporting notices and any applicable transition or exemption before selecting the reporting format.

Customer money and securities must be handled through the authorised banking, clearing and depository arrangements with segregation, reconciliation and accurate records. The broker should maintain customer onboarding and risk disclosures, trade confirmations, complaint procedures, conflict-of-interest controls, transaction surveillance, cybersecurity and AML/CFT measures. PSX's official rulebook contains risk-disclosure specimens, reporting formats, technical requirements and relevant exchange notices.

Regulation 34 requires financial statements for the prescribed periods and submission of annual audited financial statements with the audit report within four months after the end of the financial year. Other SECP, PSX, clearing-house, depository and AML reporting obligations may apply on different cycles. Track director and sponsor changes, fit-and-proper status, staff certifications, statutory accounts and beneficial-ownership records.

Failure to renew, loss of TREC, regulatory default or other specified events can result in restriction or cancellation. Regulations 10 and 11 deal with refusal, appeal and cancellation, including notification to clients and settlement of customer dues. A broker cannot treat easy exit or surrender as a substitute for resolving customer claims and outstanding clearing obligations.

Original instruments, current amendments and filing distinctions

The principal instrument inspected is the Securities Brokers (Licensing and Operations) Regulations, 2016 consolidated through S.R.O. 570(I)/2024 dated 8 April 2024, published by PSX as an original SECP regulation. Regulations 3A–11, 34, Schedule I and the prescribed forms were checked against the SECP July 2025 securities broker checklist and PSX's published TREC eligibility and charges. The checklist is administrative guidance; it does not amend the statutory regulations.

Two important differences require care. The checklist calls the category thresholds minimum equity requirements while regulation 6 specifies minimum net worth and further capital measures. It also refers generally to applying one month before licence expiry while regulation 9 fixes the annual renewal application deadline at 30 November. The guide follows the enacted text and identifies the checklist's terminology rather than silently merging them.

SECP's enacted 2024 changes include the Trading Only/Online Only prior-permission exception and a Shariah-compliant brokerage framework. SECP's drafts register also contains proposals dated 19 August, 28 August and 20 October 2026, including S.R.O. 1863(I)/2026. Those are consultation drafts, not operative amendments merely because published. The official enacted regulations register checked for this review did not establish a later final broker-regulation consolidation. Recheck subsequent notifications before filing.

Federal SECP licensing and PSX exchange entitlement are not provincial company or trade licences. A foreign sponsor, government servant, public-sector entity, existing futures broker, Online Only entrant or Shariah-compliant subsidiary may face different evidence or conditions. No uniform fixed processing time or guaranteed approval is represented.

Primary legal and regulatory sources

• Consolidated Securities Brokers Regulations ↗
• SECP securities broker checklist ↗
• PSX TREC eligibility and fees ↗
• PSX rulebook and reporting formats ↗
• SECP enacted regulations ↗
• SECP consultation drafts ↗

Governing legislation, forms and legal-review status

Read the Securities Act, 2015 with the Securities Brokers (Licensing and Operations) Regulations, 2016, especially regulations 3A–11 and 34, Form A-1, Form A, Form C, Annexures A/A-1 and B, Schedule I and the current PSX Rulebook. Check separate securities-adviser and futures-broker legislation for any proposed additional activities.

LEGAL-EDITOR SIGNOFF PENDING. The guide is based on reviewed primary publications; independent practising-lawyer certification and applicant-specific due diligence remain separate. Check subsequent enacted amendments and live filing instructions before submitting an application.

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.