To help you safeguard your interest and to avoid complaints against the stockbroker, here are some easy tips:
Be wise in selecting your brokerage firm:
Stay well documented at all times:
Be thorough in trading practices:
Take responsibility for investment decisions:
Trading Account: Initially, a potential investor needs to open a Trading Account with a brokerage firm, allowing the investor to be registered with the brokerage firm. A client identification number or account number is assigned to the investor.
CDC Sub-Account: Subsequent to opening of the Trading Account, a potential investor may open the CDC Sub-Account with the brokerage firm. The CDC Sub-Account allows a brokerage firm/ participant to open many Sub-Accounts against its participant ID. It is through the CDC Sub-Account that the investor is actually able to carry out trades on the Stock Exchange. The CDC Sub-Account are of Individual and Corporate types.
CDC Investor Account: It is the most secure type of account. This account is opened directly at the CDC by a potential investor. (However, a CDC-Sub Account is needed to trade in shares on the Stock Exchange). Investors are encouraged and recommended to open a CDC Investor Account for safe & secure trading activity and share deposit. There are two types of CDC Investor Accounts: Individual Investor Account (IIA) and Corporate Investor Account (CIA).
Unique Identification Number (UIN): A UIN is issued to every account holder by National Clearing Company of Pakistan Limited (NCCPL). This is a unique number which is given to an account holder regardless of how many other accounts the investor may open for his stock trading activities.
PSX Settlement System:
National Clearing & Settlement System (NCSS): Settlement/ payments against all trades takes place through NCSS. NCSS is owned and operated by an associated company of the Stock Exchange, called the National Clearing Company of Pakistan Limited (NCCPL).
Central Depository System (CDS): All share transfer subsequent to sale of shares from seller to buyer takes place electronically through CDS. CDS is owned and operated by an associated company of the Stock Exchange, called the Central Depository Company of Pakistan Limited (CDC). Shares of some listed companies are traded physically. These shares are exchanged directly between sellers and buyers through their brokerage firms.
T + 2 settlement system: Most transactions on the Stock Exchange are settled within two days of the transaction taking place. This is called the T + 2 Settlement system.
T + 1/ spot transactions: Spot transactions imply delivery upon payment. Normally in spot transactions, trade is settled within 24 hours.
As a (prospective) investor, you must trade through TREC (Trading Rights Entitlement Certificate) holders/ brokerage firms recognised by PSX and licensed by the Securities & Exchange Commission of Pakistan (SECP). Most brokerage firms prefer to have their main office at the Stock Exchange building. However, many of them have their branch offices outside the Exchange while many of them have their branches in different parts of the country.
It is important to talk to different licensed and recognized stock-brokers to understand which brokerage firm would be most suitable in terms of your investment objectives and in helping prepare your investment portfolio.
Working with your Stock-broker:
As an investor, you should work with your stock-broker for investment in the stock market, based on the following guidelines:
Enclosures (for corporate entities):