PSX Bans Brokers from Withdrawing Cash from Clients’ Bank Accounts
The Pakistan Stock Exchange (PSX) has made a rule to stop brokers from taking cash out of bank accounts titled under clients’ names. This ensures that all payments to clients are done through banks. PSX updated its regulations with approval from the Securities and Exchange Commission of Pakistan to protect investors better.
According to PSX Regulation 3.7.1A, PSX will inform the SECP and the banks about brokers who lose their trading rights or are declared defaulters. If a broker loses their trading rights, PSX will ask the SECP to take further action.
Under PSX Regulation 3.16.8, PSX can check the balance of any client-titled bank account held by a broker with written permission. For this, the broker must authorize PSX officials on their official letterhead to get this information from the bank.
PSX Regulation 4.17.1A says brokers must inform PSX when they open or close business bank accounts. They must give this information to PSX within five working days. PSX will specify how brokers should send this information.
PSX Regulation 4.23.3 prohibits brokers from withdrawing cash from client-titled bank accounts. All payments to clients must be made through banks.
Additionally, PSX added Clause 4.9A to its regulations. This clause says a broker with a trading rights certificate can pass a resolution for winding-up, but they must follow specific procedures. If they don’t follow these procedures, PSX will suspend their trading terminals until further notice. PSX removed the earlier rule that automatically declared such brokers as defaulters.
Additionally, PSX added Clause 4.9A to its regulations. This clause says a broker with a trading rights certificate can pass a resolution for winding-up, but they must follow specific procedures. If they don’t follow these procedures, PSX will suspend their trading terminals until further notice. PSX removed the earlier rule that automatically declared such brokers as defaulters.
These changes took effect from June 12, 2024. You can find the updated PSX Regulations on the Legal Framework section of the PSX website.
