Reporting Net Capital Balance: SECP issues guidelines for brokers
Islamabad, July 9, 2013: The
Securities and Exchange Commission of Pakistan has issued guidelines
for stock exchange brokers to ensure
that a consistent approach should be followed while complying with the regulatory requirements of Securities and Exchange Rules, 1971 (SEC
Rules) in calculating and reporting Net Capital Balance (NCB).
The Commission conducts inspections of the brokers of the stock exchanges in order
to protect investors’ assets, to
foster principles of good governance and to ensure that proper risk management procedures are in place in the capital market. During
on-site inspections of the brokerage houses, it has been observed by
the Commission that requirements prescribed in the
Third Schedule of SEC Rules for preparing NCB are being interpreted
differently by the brokers and auditors. Moreover, inconsistency has
also been observed on the part of auditors with regard to format for
certification of NCB.
The
Commission deems it appropriate and expedient to issue certain
clarifications to ensure clarity and
consistency including treatment regarding new products and their
resultant impact upon NCB. Accordingly, in light of the queries and
suggestions received from different market participants from time to
time, guidelines have been issued with respect to Third
Schedule read with Rule 2(d) of the SEC Rules including certification
of NCB under the regulatory framework. These guidelines are available
on the Commission’s website at
http://www.secp.gov.pk/Guides/
The Commission reiterates its commitment for development of efficient capital market and sound regulatory
principles through responsive policy measures and effective enforcement practices.
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