ISLAMABAD, November 14, 2024: The Securities and Exchange Commission of Pakistan (SECP) has officially notified the Securities Managers (Licensing and Operations) Regulations, 2024 to facilitate the growth of investment advisory services in Pakistan’s securities market.
These newly introduced regulations allow eligible securities brokers to provide portfolio management services by acquiring a license as a securities manager from SECP. Prior to this development, securities brokers were restricted from offering investment advisory services, limiting their ability to diversify their offerings in the capital markets.
The eligibility criteria for obtaining a securities manager license are stringent and include the requirement for a minimum net worth of Rs. 30 million and a Broker Fiduciary Rating (BFR) of 2 or higher. Additionally, applicants must demonstrate sufficient research capabilities to effectively manage client portfolios and provide informed investment advice. To ensure the security of client funds, the regulations also mandate that all customer assets and securities be held with an independent custodian.
Another significant stipulation in the regulations is the minimum investment threshold for clients, which is set at Rs. 5 million. This ensures that only those with substantial assets are able to access portfolio management services, thereby safeguarding both the client and the integrity of the investment process.
The regulations also address key operational areas, including the licensing procedures, ethical conduct expected of securities managers, the preparation of Investment Policy Statements for clients, and the management of conflicts of interest.
These regulations are part of SECP’s ongoing efforts to strengthen and modernize Pakistan’s capital market, as well as to encourage the entry of new, qualified market participants to foster increased competitiveness. This initiative follows a comprehensive consultative process, incorporating valuable feedback from relevant stakeholders in the financial and securities sectors.
