Investors

How to Secure your Account:

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:

    • Before selecting a brokerage firm, visit the offices of a few of them to observe their business practices. Try to gauge the reputation of the brokerage firm by talking to people you meet.
    • Make sure that the brokerage firm and its branch(es) are registered with the Securities & Exchange Commission of Pakistan (SECP).
    • Get clear information on the commission rates and services provided and compare these with those of other brokers.

  • Account opening:

    • You would need to open a Trading Account with the brokerage firm. Subsequently, you would also need to open a CDC Sub Account/ CDC Investor Account. It is important that you open the account(s) in your name.
    • Thoroughly read and understand the terms and conditions of the form of the Trading Account. Strike out any inapplicable clause and sign the same. Get the deleted clauses signed by the brokerage firm as well.
    • A CDC Investor Account is more secure than a CDC Sub Account; hence more preferable. You stay in control of your securities because they can only move once you give a transaction order.

  • Stay well documented at all times:

    • Obtain your Client Identification Number assigned by the brokerage firm.
    • Instruct your broker in writing to always enter the Client Identification Number in the trading system of the exchange while executing your trades. This would help in setting an audit trail of trades made on your account.
    • Make sure that all receipts/ confirmations etc. are issued/ made in the name of the brokerage firm on their stationery bearing their name.
    • Obtain periodic statements from your brokerage firm to keep a check on your trade positions and account balances. Also get a periodic Sub-Account statement from the Central Depository Company to verify your securities and their movement.
    • Make sure to receive and check your Trade Confirmations against any stock trades executed, from your brokerage firm.

  • Be thorough in trading practices:

    • Try to place your trade orders through one person rather than through several, in order to reduce chances of any misunderstanding.
    • Ensure that every time you buy shares, you get them transferred to your CDC Sub Account/ CDC Investor account on the settlement day only.
    • In case of any discrepancies, contact your broker immediately. Don’t make simplistic assumptions or leave things to chance.

  • Take responsibility for investment decisions:

    • Know your financial capacity and needs well. Stock prices keep falling and rising. Losing money in a stock trade is not your broker’s responsibility. Stand by your decisions.
    • Avoid discretionary trading accounts whereby the brokerage firm is given the freedom to execute trades for you.

Account Opening & Trading :

  • 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.

Download list of brokerage firms

Download list of branches of brokerage firms

  • 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:

  • Talk to a broker
  • Define Investment Objectives
  • Develop Investment Portfolio Statement
  • Identify a Brokerage Firm
  • Open a Trading Account and CDC Sub Account/ CDC Investor Account
  • Deposit money in account
  • Start investing
  • Build a portfolio
  • Regular follow-up with stock-broker

Enclosures (for individuals):

  • Attested copies of National Identity Card of the applicant.
  • Attested copies of National Identity Card of the Joint Holders and or Nominee(s) (if applicable)
  • Attested copies of passports of the applicant, Joint Holders and or Nominee(s) (in case of non-residents)
  • Copy of the letter of authorization from the Account Holder(s) of the person authorized to trade in my/our accounts (if other than the account holder).
  • A list of Transaction fee, Commission to be charged by the Broker and other CDC charges to be levied.

Enclosures (for corporate entities):

  • Certified true copy of Board Resolution (specimen provided as per Annexure-A below).
  • Certified true copies of Memorandum & Articles of Association.
  • List of authorized signatories.
  • List of nominated persons allowed placing orders.