SECP proposes changes to Regulation 16(7) on brokerage insiders’ trading through other brokers

Exactly what Regulation 16(7) would change

The existing provision governs dealings by directors and substantial shareholders of a securities broker who trade securities or security-based futures contracts through another broker of the same exchange. Draft S.R.O. 1863(I)/2026 proposes targeted changes to Regulation 16(7), not a general rewrite of the 2016 Regulations.

First, the written post-trade record delivered to the brokerage's company secretary under Regulation 16(7)(b)(iv) would be due within seven (7) working days rather than two days after the transaction. The existing requirement to attach a copy of the executing broker's contract note would be deleted.

Second, Regulation 16(7)(b)(v), requiring the company secretary to immediately forward those details to the securities exchange, would be omitted. The draft therefore removes that automatic PSX notification step under this particular regulation.

Third, a new proviso would exclude certain substantial shareholders from Regulation 16(7): (i) a financial institution, defined as a banking company, development financial institution, non-banking financial company or insurance company; and (ii) a parent securities broker that has a wholly owned subsidiary providing Shariah-compliant brokerage services. The exemption is expressed for qualifying substantial shareholders, not for every director generally.

What stays unchanged under the draft

Regulation 16(7)(a) remains as drafted: the non-executive director or substantial shareholder trading through another securities broker must secure one-time prior written approval from the brokerage of which that person is a director or substantial shareholder, and that approval must also be submitted to the securities exchange, unless the proposed new substantial-shareholder exemption applies.

Regulation 16(7)(b) also retains the requirement to inform the brokerage's company secretary in writing on the day of each transaction. The details include the executing broker, reason for using another broker, date, price, instrument, quantity, security form and whether the deal is on- or off-exchange. The draft does not remove this same-day internal notification duty for persons still subject to the provision.

The broader securities law, exchange obligations, insider-trading rules and market-abuse restrictions are not repealed by the proposal. Listed-broker disclosure requirements under separate provisions require independent assessment.

Consultation deadline and compliance steps

The annexed SECP notification is dated 13 October 2026 and was listed on the SECP website on 20 October. PSX circulated the proposed changes in Notice PSX/N-1291 dated 22 October 2026, seeking comments by 4 November 2026 at comments.rad@psx.com.pk.

Brokerages should check how they document one-time prior approvals, same-day reporting to their company secretaries, supporting written records and exchange notifications. Any anticipated reduction in reporting obligations must be treated as proposed until a final instrument is issued and comes into effect.

Affected stakeholders may comment specifically on the change from two days to seven working days, removal of the contract note, cessation of immediate PSX forwarding, and the scope of institutional and Shariah-subsidiary ownership exemptions.