IFMP Pakistan's Market Regulations Certification (PMR), Pakistan cheat sheet

Primary securities regulator: the Securities and Exchange Commission of Pakistan (SECP), established under the Securities and Exchange Commission of Pakistan Act, 1997; it administers the Securities Act, 2015 and the Futures Market Act, 2016.

The Securities Act, 2015 replaced the Securities and Exchange Ordinance, 1969 and governs public offers, disclosure, market abuse, intermediaries, and takeovers.

Three core prohibited market behaviours: insider trading (trading on unpublished price-sensitive information by connected persons), market manipulation (false or misleading appearance of trading, wash trades, matched orders), and front-running by intermediaries.

Price-sensitive information is information not generally available that, if published, would likely materially affect the price of a security; connected persons include directors, substantial shareholders, employees, and their relatives and tippers.

A public offer of securities requires an approved prospectus; the SECP may refuse or suspend a prospectus, and misstatements create civil liability for issuers, directors, and advisers.

Takeover regime: a person acquiring 30% or more of the voting shares of a listed company must make a mandatory public offer of acquisition to remaining shareholders at the prescribed price.

Listing and trading occur on licensed exchanges (PSX) under SECP-licensed front-end and clearing arrangements; the Central Depository Company (CDC) holds securities in book-entry form under the Central Depositories Act, 1997.

The SECP regulates non-bank financial companies, insurance, and pension schemes; the State Bank of Pakistan regulates banks and the payment system, so banking-side market matters sit with SBP.

A securities broker must be registered with the SECP and be a member of a licensed exchange; brokers must segregate client assets, maintain minimum net capital, and keep records available for inspection.

Client money and securities must be held in segregated accounts; commingling client assets with broker assets is a violation, and the exchange's regulations prescribe custody and reconciliation duties.

Know Your Customer and anti-money-laundering obligations derive from the Anti-Money Laundering Act, 2010 and SECP AML/CFT Regulations; brokers must perform customer due diligence, monitor transactions, and report suspicious transactions to the FMU.

Settlement on PSX follows a T+2 cycle through the National Clearing Company of Pakistan Limited (NCCPL), which acts as central counterparty and manages the clearing house protection fund.

Insider trading liability can be civil or criminal; the SECP may disgorge profits, impose penalties, and refer matters for prosecution, and the burden shifts to the connected person to show a lawful basis for the trade.

Market manipulation prohibitions cover creating a false market, price rigging, dissemination of false information, and abusive short selling or circular trading designed to inflate volumes.

Enforcement tools include show-cause notices, investigation orders, cease-and-desist directions, monetary penalties, suspension of registration, and disqualification of directors.

Investor protection: the SECP operates a complaints portal, and the exchange runs an investor protection fund; the Securities Act provides statutory remedies for misleading disclosure and unfair market practices.

Corporate governance for listed companies follows the Listed Companies (Code of Corporate Governance) Regulations, requiring independent directors, an audit committee, and related-party transaction approval.

Listed companies must disclose material information promptly to the exchange, including board changes, dividend declarations, material contracts, defaults, and changes in shareholding of directors and substantial shareholders.

Periodic reporting: quarterly accounts within 30 days of the quarter's end, half-yearly accounts within 60 days, and annual audited accounts within 120 days of the financial year end, with the annual report circulated per the Companies Act, 2017.

Directors and substantial shareholders must report changes in their holdings; insider trading rules require pre-clearance and closed periods before results announcements.

Audit requirements: statutory auditors must be on the SECP's approved list, and the auditor must report on internal controls and compliance with the Code of Corporate Governance for listed companies.

Related-party transactions require audit committee review and, where material, shareholder approval; the transaction must be disclosed with the basis of pricing.

Public companies must file returns with the SECP under the Companies Act, 2017, including annual returns, changes in directors, and special resolutions; failure to file attracts penalties and possible strike-off.

Continuous disclosure obligations include immediate disclosure of any event likely to affect the market price, and the exchange may require clarification of unusual price or volume movements.

Record-keeping: regulated persons must retain books, client records, and communication records for the period prescribed by SECP regulations and produce them on demand.

Permitted market products on PSX include equities, debt securities, exchange-traded funds, REITs, and derivatives; derivatives trade under the Futures Market Act, 2016 and SECP Futures Market Regulations.

Collective investment schemes are governed by the Non-Bank Financial Companies Regulations; asset management companies need an SECP licence, and the trustee must be a licensed entity independent of the manager.

Mutual funds must publish NAV daily, disclose expense ratios, and follow investment limits per scheme category (e.g., equity, money market, income) set by SECP regulations.

Foreign portfolio investment in listed securities is generally permitted through Special Convertible Rupee Accounts (SCRA) under SBP rules, with repatriation of capital and dividends allowed subject to reporting.

Cross-border offerings and dual listings require SECP approval and compliance with the host jurisdiction; the SECP may recognise foreign exchanges and mutual recognition arrangements.

Islamic capital market instruments (sukuk, shariah-compliant funds) require a Shariah advisor and compliance with the SECP's shariah governance framework.

Short selling and margin trading are permitted only under SECP-approved frameworks (e.g., deliverable futures, margin financing), with prescribed margins and eligible securities.

Advertisement and marketing of securities offerings require SECP or exchange clearance; unapproved public offers and unauthorised collective investment schemes are prohibited.

Fiduciary duty: brokers and advisers must act in the client's best interest, avoid conflicts, disclose remuneration, and obtain suitability information before recommending products.

Confidentiality: client information may be disclosed only with consent or where required by law, court order, or a regulator's lawful demand.

Personal account dealing by employees of regulated firms requires prior approval and is restricted around client orders and unpublished price-sensitive information.

Market abuse reporting: firms must have surveillance and escalation procedures, and staff must report suspicious orders or trades to compliance rather than execute them.

Fit-and-proper criteria apply to directors and key persons of regulated entities, considering integrity, competence, financial soundness, and past regulatory action.

Whistleblowing: the SECP encourages reporting of violations and protects good-faith disclosures; retaliation against whistleblowers is itself a compliance breach.

Ethical standards prohibit mis-selling, churning client accounts, unauthorised trading, and guaranteeing returns on market-linked products.

Continuing professional development and certification requirements apply to registered representatives, and lapses can lead to suspension of registration.