Pakistan's Capital Market Regulation and Compliance
Domain 1: Pakistan's Capital Market Regulation and Compliance
This domain tests how Pakistan's securities market is supervised and where a financial advisor's obligations sit within that structure. Expect questions on regulators, licensed intermediaries, market infrastructure, disclosure, and conduct around trading and client assets.
Regulators and infrastructure
- SECP is the apex regulator for the securities market, brokers, asset managers, REITs, and insurance; SBP regulates banks and monetary policy.
- PSX is the trading venue; CDC holds securities in book-entry form; NCCPL provides clearing, settlement, and risk management. Settlement on PSX is T+2.
- Broker licensing, capital and conduct requirements flow from the Securities Act, 2015 and SECP regulations; the Companies Act, 2017 governs listed companies and disclosures.
- Listed companies must disclose price-sensitive information promptly; insider trading and market manipulation are prohibited.
Compliance in practice
Client onboarding requires KYC, risk profiling, and suitability. Client assets must be segregated; unauthorized trading and guaranteed returns are prohibited. Record-keeping and complaint handling are examinable.
Worked example
A client asks an advisor to execute a PSX trade in a stock about to announce a merger the client learned about as an employee. Reasoning: the information is material and non-public, so trading or tipping is insider trading. The advisor should decline, not route the order through another account, document the request, and escalate to compliance. The client's status as an employee does not make the trade permissible.
Traps
Do not confuse PSX with SECP: PSX lists and supervises trading; SECP licenses and regulates. Do not treat T+2 as same-day settlement. 'Compliance' is not only reporting; it includes suitability, segregation, and market-abuse controls.