Updated: Friday January 25, 2013/AlJumaa
Rabi' Awwal 14, 1434/Sukravara
Magha 05, 1934, at 09:26:55 PM
Brokers’ and
Agents’ Registration Rules, 2001
[Gazette of
S.R.O.
299(I)/2001, dated 10‑05‑2001.‑ In exercise of the powers conferred by clause (b) of section 43
of the Securities and Exchange Commission of Pakistan Act, 1997 (XLII of 1997),
read with section 5A of the Securities and Exchange Ordinance, 1969 (XVII of
1969), the Securities and Exchange Commission of Pakistan, with the approval of
the Federal Government hereby makes the following rules, namely:--‑
1. Short title and commencement.‑ (1) These rules may be called the Brokers and
Agents Registration Rules, 2001.
(2)
They shall come into force at once.
2. Definitions.‑ (1) In these rules, unless there is anything
repugnant in the subject or context:
(a)
"Act" means the Securities and Exchange Commission of Pakistan Act,
1997 (XLII of 1997);
(b)
"clearing house" means a clearing house of a stock exchange
performing the function of clearing and settling trades in securities or a
clearing company established for such purpose;
(c)
"Commission" means the Securities and Exchange Commission of
(d)
"Enquiry officer" means any officer of the Commission, or any other
person, who is appointed by the Commission under the Ordinance or the Act;
(e)
"Ordinance" means the Securities and Exchange Ordinance, 1969 (XVII
of 1969).
(f)
"Regulations" means the regulations made by a Stock Exchange; and
(g)
"Schedule" means the Schedule annexed to these rules.
(2)
All other words and expressions used but not defined in these rules shall have
the same meaning as are assigned to them in the Securities and Exchange
Commission of
3. Application for registration.‑ (1) A member desirous of acting as a broker shall
make an application to the Commission in Form A as set out in the First
Schedule, for grant of a certificate of registration through the stock exchange
of which he is a member.
(2)
An application for registration under sub‑rule (1) shall be submitted
alongwith fee as prescribed in the Second Schedule.
(3)
The brokers who are working as brokers before coming into force of these rules,
shall apply for registration in accordance with the provisions of sub‑rule
(1), within ninety days of the date of coming into force of these rules.
(4)
The stock exchange shall forward the application to the Commission within
fourteen days from the date of its receipt.
4. Eligibility for registration.‑(1) A person shall be eligible for registration
as a broker under these rules, if he‑
(a)
is a member of the stock exchange;
(b)
is not less than twenty‑one years of age;
(c)
is a citizen of
(d)
has at least passed graduation or equivalent examination from an institution
recognized by the Government;
Provided
that the Commission may relax the educational qualification in suitable cases
on merit having regard to the applicant's experience;
(e)
is not a lunatic or a person of unsound mind;
(f)
has not been convicted of an offence involving fraud or breach of trust;
(g)
has not been adjudicated as insolvent or has suspended payment or has
compounded with his creditors;
(h)
has experience of not less than five years in the business of buying, selling
or dealing in securities;
(i)
has not been a partner of a brokerage firm or a director of a brokerage company
which has been convicted of an offence concerning brokerage.‑;
(j)
has not defaulted in payment of dues at a clearing house;
(k)
has not defaulted in compliance with the provisions of the Ordinance the Act
and the rules and regulations made thereunder;
(l)
is not in default on settlement of an investor complaint where such complaint
has been adjudicated by a stock exchange or a committee of a stock exchange or
the Commission; and
(m)
has complied with the directives of the Commission in respect of business
conduct, dealings with clients and financial prudence.
(2)
The applicant shall remain in compliance with the requirements of sub‑rule
(1) at all times and inform the Commission immediately when he is non‑compliant
with any of the terms and conditions.
5. Certificate of registration.‑‑(1). The Commission, if it is satisfied
that the applicant is eligible for registration as a broker, and that it shall
be in the interest of the stock market to do so, may grant certificate of
registration to the applicant in Form B as set out in the First Schedule.
(2)
The certificate of registration of a broker shall be valid for one year;
(3)
The Commission shall send an intimation of registration under sub‑rule
(1) to the concerned stock exchange or stock exchanges.
(4)
No application made under sub‑rule (1) of rule 3 shall be refused except
after giving an applicant a reasonable opportunity of being heard.
(5)
In case the Commission refuses the grant of certificate of registration to an
applicant after providing an opportunity of being heard under sub‑rule
(4), the decision shall be communicated to the applicant as well as the
concerned stock exchange within fourteen days of the last hearing given to the
applicant, stating therein the grounds for refusal.
(6)
An applicant aggrieved by the decision of the Commission under sub‑rule
(5) may apply, within a period of thirty days from the date of receipt of such
intimation, to the Commission for review of its decision.
6. Effect of refusal for registration.‑A person whose application for grant of a
certificate of registration as a broker has been refused by the Commission from
and on the date of receipt of the decision under sub‑rule (5) of rule 5
shall not deal in securities as a broker.
7. Renewal of registration.‑(1) The certificate of registration shall be
renewable on payment of fee as prescribed in the Second Schedule.
(2)
Requirements of these rules as applicable to initial registration shall also
apply to renewal of the registration.
8. Suspension of registration.‑Where the Commission is of the opinion that a
broker‑
(i)
has failed to remain in compliance with any conditions subject to which
certificate of registration was granted under these rules;
(ii)
has otherwise failed to comply with any requirement of the Act or the Ordinance
or of any rules or direction made or given thereunder;
(iii)
has contravened the rules and regulations of the stock exchange;
(iv)
has failed to follow any requirement of the code of conduct laid down in the
Third Schedule.;
(v)
has failed to comply with the directives of the Commission in respect of business
conduct, dealings with clients and financial prudence;
(vi)
has failed to furnish any information related to his transactions in securities
as may be required by the Commission;
(vii)
has failed to submit periodical returns as required by the Commission;
(viii)
has furnished wrong or false information;
(ix)
has failed to settle an investor complain where such complaint had been,
adjudicated by a stock exchange or a committee of a stock exchange or the
Commission;
(x)
has not co‑operated in any enquiry or inspection conducted by the
Commission;
(xi)
has indulged in manipulating price rigging or cornering activities in a stock
exchange;
(xii)
his financial position has deteriorated to such an extent that the Commission
is of the opinion that his continuance in securities business shall not be in
he interest of investors; and
(xiii)
has been suspended by a stock exchange.
the
Commission may, if it considers necessary in the public interest so to do, by
order in writing:.‑
(a)
suspend the registration of a broker for such period as may be specified in the
order; or
(b)
impose on a broker a fine not exceeding one hundred thousand rupees:
Provided
at an appropriate opportunity of being heard shall be provided to the broker to
clarify his position with regard to suspension of registration.
9. Cancellation of registration. ‑Where the Commission is of the opinion that
the cause of suspension of registration under rule 8 continues during the
period of such suspension, or a broker whose registration has been suspended.‑
(i) is engaged in insider trading;
(ii) has been found guilty of fraud, or convicted
of a criminal offence;
(iii)
has his membership cancelled by a stock exchange; or
(iv)
has not complied with a directive of the Commission, the Commission may, if it
considers it necessary for the protection of investors so to do by order in
writing, cancel the registration of the broker;
Provided
that no such order shall be made except after giving the broker an opportunity
of being heard.
10. Automatic cancellation of
registration.‑(1) A certificate
of registration granted under these rules shall stand cancelled automatically
if a broker to whom such certificate has been granted.‑
(a)
ceases to be a member of a stock exchange;
(b)
is declared defaulter by a stock exchange and is not re‑admitted to
membership within a period of six months from such declaration;
(c)
surrenders membership of a stock exchange;
(d)
is declared insolvent by a Court;
(e)
voluntarily surrenders certificate of registration to the Commission or
(f)
is wound up by an order passed by a Court.
(2)
Where a certificate of registration stands cancelled under sub‑rule (1),
the concerned stock exchange or clearing house shall intimate the Commission immediately
about such cancellation of the certificate of registration.
11. Broker, etc. to clear liabilities.‑Notwithstanding the refusal, suspension or
cancellation of a certificate of registration under rules 6, 8, 9 or 10, the
broker shall be responsible for clearing all his obligations upto the date on
which he has been working as such broker.
12. Brokers to abide by code of conduct.‑A broker holding a certificate of registration
under these rules shall abide by the code of conduct specified in the Third
Schedule.
13. Application for registration of
agent.‑(1) A person desirous of
acting as an agent shall make an application to the Commission in Form as set
out in First Schedule for grant of a certificate of registration, through a
broker with whom he is to be affiliated and the concerned stock exchange.
(2)
The application for registration under sub‑rule (1) shall be accompanied
by an authority letter from a broker with whom he is to be affiliated alongwith
two references including one from his banker.
(3)
The application shall be submitted alongwith fee as prescribed in the Second
Schedule.
(4)
The stock exchange on receipt of an application under sub‑rule (1) shall
verify the information contained therein and shall also certify that the
applicant is eligible for registration as per criteria specified in sub‑rule
(5).
(5)
The eligibility criteria for registration as an agent shall be as specified in
rule 3 of the Member's Agents and Traders (Eligibility Standards) Rules 2001.
(6)
The stock exchange shall forward the application form alongwith their
recommendations, of such applicants who comply with the requirements aforesaid
to the Commission within thirty days from the date of its receipt.
14. Registration.‑‑(1) The Commission, if it is satisfied
that the applicant is eligible for registration as an agent, shall grant a
certificate of registration to the applicant in Form D as set out in the First
Schedule, subject to such conditions as it may deem fit.
(2)
The certificate of registration shall be valid for one year.
(3)
No application made under sub‑rule (1) of rule 13 shall be refused except
after giving the applicant a reasonable opportunity of being heard.
(4)
In case the Commission refuses the grant of certificate of registration to an
applicant after providing the opportunity of being heard under sub‑rule
(2), the decision shall be communicated to the applicant as well as the member
and the stock exchange concerned within fourteen days of the last hearing given
to the applicant stating therein the grounds for refusal.
(5)
An applicant aggrieved by the decision of Commission under sub‑rule (4)
may apply, within a period of thirty days from the date of receipt of such
intimation, to the Commission for review of its decision.
15. Effect of refusal.‑A person whose application for grant of a
certificate of registration has been refused by the Commission shall, on and
from the date of the communication of refusal under rule 14, cease to carry on
any activities as agent.
16. Renewal of registration.‑(1) The certificate of registration of an agent
shall be valid for one year and shall be renewable on payment of fee as
prescribed in the Second Schedule.
(2)
Requirement of these rules applicable to an initial registration shall also apply
to renewal of the registration.
17. Agent not to deal with clients in
his name.‑(1) No agent shall
deal with his clients in his own name. All the transactions shall be in the
name of his member or broker and shall be settled with broker or member only.
Explanation.‑Dealing
with clients includes receiving cash or cheque from the client in the agent's
own name and issuing cash memos receipts, delivery notes or any other document
in his name.
18. General obligations and
responsibilities.‑(1) The brokers
and the agents shall be responsible to keep and maintain the books of accounts,
records and documents as specified in the Securities and
Exchange
Rules, 1971, and the Stock Exchange Members (Inspection of Books and Record)
Rules, 2001.
(2)
The provision of rules 8 to 12 shall be applicable to the agents as they apply
to the brokers.
THE FIRST SCHEDULE
FORM A
[See rule 3 (1)]
Application Form for Registration as
broker with Securities and Exchange Commission of Pakistan.
1.
Name of the Stock Exchange of which the applicant is the member (Please furnish
the tenure of membership).
2.
Name of the member with Code No.
3.
Address of the member.
4.
Trade name of member.
5.
Form of organization sole proprietorship/partnership corporate body/financial
institution. (Please give names of proprietor/directors) (Copy of the
memorandum and articles of association or the partnership deed, as the case may
be, is enclosed).
6.
Educational qualifications of proprietor/partners/directors.
7.
Whether the applicant or its sales personnel or approved user has passed any
certification programme? If so, please specify the detail.
8.
The experience of the applicant or directors or partners in trading at the
securities market.
9.
Date of admission to membership of Stock Exchange.
10.
Whether you are a member of more than one Stock Exchange? If so, please give
name(s).
11.
Net capital of the applicant. (Please furnish details alongwith an auditor's
certificate in support thereof).
12.
Whether the applicant, any director or partner, any time has been convicted of
any economic offence? If so, please furnish the details.
13.
Whether the applicant, any director or partner, has been declared insolvent or
bankrupt, or declared defaulter by any Stock Exchange? If so, please furnish
details.
14.
Whether the applicant, any director or partner has any time been subjected to
any proceedings or penalty by the Commission under the Securities and Exchange
Ordinance, 1969, or the Securities and Exchange Commission of Pakistan Act
1997, or any of the rules made thereunder If so, please furnish the details.
15.
Indicate fax, telex and phone number (s).
16.
Attach affidavit indicating the position with regard to clauses (a) to (j) of
rule 4 of the Brokers and Agents Registration Rules, 2001 with documentary
evidence you want to be taken into consideration.
17.
Name of your clearing member.
18.
Application processing fee deposited.
I
declare that the information given in this Form is true to the best of my knowledge
and belief. I also declare that if any change occurs in the information given
in this application and the
accompanying
documents. I shall report the same to the Commission on the same day on which
the change occurs.
Date________________________________
Signature____________________________
Recommendation of the Stock Exchange
This
is to certify that _____________ is a member of this Stock Exchange and is recommended
for registration with the Securities and Exchange Commission of Pakistan. He satisfies
the conditions for registration.
Signature________________________________________
Name___________________________________________
Designation_______________________________________
Date:_____________________________________________
FORM B
[See rule 5 (1 )]
SECURITIES AND EXCHANGE COMMISSION OF
PAKISTAN
CERTIFICATE OF REGISTRATION AS BROKER
In
exercise of the powers conferred by section 5A of the Securities and Exchange
Ordinance, 1969 (XVII of 1969), read with the rule 5 of the Brokers and Agents
Registration Rules, 2001, the Securities and Exchange Commission of Pakistan,
hereby grants a certificate of registration to______________a member of
the____________Stock Exchange(s) as a Broker for carrying on the activities of
buying, selling or dealing in securities and carrying on such other activities
as are permitted by such Stock Exchanges) subject to conditions, prescribed in
the rules aforesaid. and such other conditions as may be prescribed from time
to time by the Commission.
Registration
number allotted is as under:‑
This
certificate of registration shall be valid till it is suspended or cancelled in
accordance with the rules.
Date:____________
For and on behalf of
Securities and Exchange Commission of Pakistan,
FORM C
[See rule 13 (1)]
APPLICATION FORM FOR REGISTRATION AS AN
AGENT WITH SECURITIES
AND EXCHANGE COMMISSION OF PAKISTAN
1.
Name of applicant:
2.
Trade name of agent, firm, corporate body:
3.
Form of organization‑sole proprietorship, partnership, corporate body.
Please give names of proprietor, partners, and directors. Copy of memorandum
and articles or partnership deed, as the case may be is enclosed:
4.
Educational qualifications of proprietor, partners, directors etc
Name:
Status:
Qualification:
5.
Educational qualification of applicant:
6.
Whether the applicant has passed any certification programme
7.
Past experience of applicant:
8.
Residential address_________________.
9.Telephone
No.___________ NIC No._________
10.
Name of the member‑broker and Stock Exchange to which applicant is
affiliated:
11.
Date of acquiring agentship:
12.
Infrastructural arrangements:
Number
of Employees:
Office
address:
Phone
No.
Telex
No.
Fax
No.
Residential
Phone Nos. of proprietor, partners, directors etc.
13.
Number of branch offices and their location with phone, telex and fax number:
I
certify that the information given in this application is true to the best of
my/our knowledge and belief.
Recommendation
letter from the stock broker to whom I/we am/are affiliated and two references,
including one from the banker as required are enclosed.
Signature:
Dale:
Recommendation of the Stock Exchange:
This
is to certify that _______________ is an agent affiliated to _________________ member‑broker
of this Stock Exchange.
The
applicant is recommended / not recommended for registration by the Commission.
AUTHORISED
SIGNATORY
Signature_________________
_______________________Stock
Exchange.
ANNEX TO FORM C
[See rule 13 (2)]
RECOMMENDATION LETTER TO BE GIVEN BY THE
MEMBER WITH
WHOM THE AGENT IS AFFILIATED
To
The_______________________Stock
Exchange.
Dear
I/
We understand that_________________son of_________________aged______years,
residing at______________________________is attached to me
at_________________for carrying on the shares and securities business as my
agent.
I/
We confirm that the aforesaid person is transacting business through me
from_________and is a fit and proper person to be registered as an agent. I/We
also confirm that the aforesaid person is known to me/us for well over years
and has got good financial background, moral character and integrity, and has
been transacting business frequently and was meeting the market commitments as
when they arise.
I/We
take full responsibility for the actions and dealings of the aforesaid person
as agent.
I/We
hereby recommend the application of the aforesaid person for granting
registration for carrying on shares and securities business as agent. I/We also
wish to state that whatever the information that has been submitted is true to
the best of my/our knowledge and if at a later date if any material information
comes to my/our knowledge subsequent to the submission of this application, I/
We undertake to keep informed about the same.
I/
We member (s) of_______________Stock Exchange hereby agree to recommend the
aforesaid person.
Yours
faithfully,
Signature
of member (s).
Date____________________________
FORM D
[See rule 14 (1)]
SECURITIES AND EXCHANGE COMMISSION OF
PAKISTAN
BROKERS AND AGENTS REGISTRATION RULES,
2001
CERTIFICATE OF REGISTRATION AS AGENT
In
exercise of the powers conferred by section 5A of the Securities and Exchange
Ordinance, 1969 (XVII of 1969), read with the Brokers and Agents Rules, 2001,
the Securities and Exchange Commission of Pakistan hereby grants a certificate
of registration to___________as an Agent of__________________who is a member
of___________Stock Exchange subject to the conditions prescribed in the rules
aforesaid and such other conditions as may be prescribed from time to time by
the Commission.
Registration
number allotted is as under:
This
certificate of registration shall be valid till it is suspended or cancelled in
accordance with the rules.
Date
___________
For and on behalf of
Securities and Exchange Commission of Pakistan
THE SECOND SCHEDULE
[See rules 3(2), 7 (1), 13 (3) and 16]
TABLE OF FEES FOR REGISTRATION / RENEWAL
|
S.
No. |
Type
of Applicant |
Fee
for first registration |
Fee
for renewal |
|
|
|
Rs. |
Rs. |
|
|
|
|
Third
Sched. |
|
1. |
Broker |
10,000 |
5,000 |
|
2. |
Agent |
4,000 |
2,000 |
THE THIRD SCHEDULE
[See rules 8(iv) and 12]
CODE OF CONDUCT
A. GENERAL
1.
Integrity ‑ A broker shall maintain high standards of integrity,
promptitude and fairness in the conduct of all his business.
2.
Exercise of due skill and care. ‑ A broker shall act with due skill, care
and diligence in the conduct of all his business.
3.
Manipulation ‑ A broker shall not indulge in manipulative, fraudulent or
deceptive transactions or schemes or spread rumors with a view to distorting
market equilibrium or making personal gains.
4.
Malpractices. ‑ A broker shall not create false market either singly or
in concert with others or indulge in any act detrimental to the investors',
interest or which leads to interference with the fair and smooth functioning of
the market. A broker shall not involve himself in excessive speculative
business in the market beyond reasonable levels not commensurate with his
financial soundness.
5.
Compliance with statutory requirements. ‑ A broker shall abide by all the
provisions of the Act and the Rules, Regulations issued by the Commission and
the Stock Exchange from time to time as may be applicable to him.
B. Duty to the Investor
1.
Execution of orders. ‑ A broker, in his dealings with the clients and the
general investing public, shall faithfully execute the orders for buying and
selling of securities at the best available market price and not refuse to deal
with a small investor merely on the ground of the volume of business involved.
A broker shall promptly inform his client about the execution or non‑execution
of an order, and make prompt payment in respect of securities sold and arrange
for prompt delivery of securities purchased by clients.
2.
Issue of contract note. ‑ (1) A broker shall not refuse to promptly issue
to his clients. purchase or sale notes for all the transactions entered into by
him with his clients.
(2)
A broker shall not refuse to promptly issue to his clients scriptwise split
purchase or sale notes:
Provided
that: ‑
(i)
an agent shall only split the contract notes clientwise and scriptwise
originally issued to him by the affiliated broker into different denominations;
and
(ii)
an agent shall not match the purchase and sale orders of his clients and each
such order must invariably be routed through a broker or the stock exchange
with whom he is affiliated.
3.
Breach of trust. ‑ A broker shall not disclose or discuss with any other
person or make improper use of the details of personal investments and other
information of a confidential nature of a client which he comes to know in his
business relationship.
4.
Business and commission. ‑ (1) A broker shall not encourage sales or
purchases of securities with the sole object of generating brokerage or
commission.
(2)
A broker shall not furnish false or misleading quotations or give any other
false or misleading advice or information to a client with a view of inducing
him to do business in particular securities and enabling himself to earn
brokerage or commission thereby.
5.
Business of defaulting clients. ‑A broker shall not deal to transact
business knowingly, directly or indirectly or execute an, order for a client
who has failed to carry out his commitments in relation to securities with
another broker.
6.
Fairness to clients. ‑ A broker, when dealing with a client, shall
disclose whether he is acting as a principal or as an agent and shall ensure at
the same time that no conflict of interest arises between him and the client.
In the event of a conflict of interest, he shall inform the client accordingly
and shall not seek to gain a direct or indirect personal advantage from the
situation and shall not consider clients' interest inferior to his own.
7.
Investment advice. ‑ A broker shall not make a recommendation to any
client who might be expected to rely thereon to acquire, dispose of, retain any
securities unless he has reasonable grounds for believing that the
recommendation is suitable for such a client upon the basis of the facts, if
disclosed by such a client as to his own security holdings, financial situation
and objectives of such investment. The broker should seek such information from
clients, wherever he feels it is appropriate to do so.
8.
Competence of broker. ‑ A broker should have adequately trained staff and
arrangements to render fair, prompt and competent services to his clients.
C. Broker vis‑a‑vis other
Brokers‑
1.
Conduct of dealings. ‑ A broker shall cooperate with the other
contracting party in comparing unmatched transactions. A broker shall not
knowingly and willfully deliver documents which constitute bad delivery and
shall co‑operate with other contracting party for prompt replacement of
documents which are declared as bad delivery.
2.
Protection of clients' interest.‑ A broker shall extend fullest
cooperation to other brokers in protecting the interests of his clients
regarding their rights to dividends, bonus shares, right shares and any other
right related to such securities.
3.
Transactions with brokers.‑ A broker shall carry out his transactions
with other brokers and shall comply with his obligations in completing the
settlement of transactions with them.
4.
Advertisement and publicity. ‑ A broker shall not advertise his business publicly
unless permitted by the Stock Exchange. .
5.
Inducement of clients. - A broker shall not resort to unfair means of inducing
clients from other brokers.
6.
False or misleading returns. ‑ A broker shall not neglect or fail or
refuse to submit the required returns and not make any false or misleading
statement on any returns required to be submitted to the Board and the Stock
Exchange.
D. Brokers vis‑a‑vis
Commission and Stock Exchange
1.
General conduct‑(1) A broker shall not indulge in dishonourable,
disgraceful, disorderly or improper conduct on the Stock Exchange nor shall he
wilfully obstruct the business of the stock exchange. He shall comply with the
rules, bye‑Jaws and regulations of the stock exchange.
(2).
A broker shall faithfully comply with the general or specific directives issued
by the Commission.
2.
Failure to give information. ‑ A broker shall not neglect, fail or refuse
to submit to the Commission or the stock Exchange with which he is registered,
such books, special returns, correspondence; documents and papers or any part
thereof as may be required.
[No.
2 (65)/SE/2001]
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