WhatsApp Order, No Ticket: Client Denies the Trade
At 09:42 a client sends a WhatsApp voice note to a broker's sales trader: 'Buy 60,000 shares of ABC, market, today.' The sales trader listens, executes the order in five tranches, and sends a screenshot of the fills. ABC is thinly traded; the price rises 7.5% during execution. At 14:30 the client messages: 'I said limit 41.50, not market. Cancel and reverse; I will not pay.' The broker's order management system shows no pre-trade order ticket. The only record is the sales trader's personal phone, and the voice note is still available. The client's account has Rs 1.2 million cash against a settlement obligation of Rs 3.1 million. The broker's compliance officer must decide whether to treat the trade as authorised, close out the position, or absorb the loss, and whether to report the matter.
1. Assess whether the broker can rely on the WhatsApp voice note as a valid client order. What records and controls should have existed?
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A WhatsApp voice note on a personal phone is weak evidence, not a compliant order record. The broker should have captured the order in its order management system before execution, with client identity, UIN, time stamp, security, side, quantity, order type, price/limit, and the name of the person who took the order. Recorded lines or an approved electronic channel are preferable. The voice note may show that some instruction was given, but it does not prove the exact terms if the client says 'limit 41.50'. The absence of a pre-trade ticket and the use of a personal device are control failures. Compliance should preserve the phone and message, interview the sales trader, and compare the message with the fills and the client's prior trading pattern.
2. What are the broker's settlement obligations to NCCPL, and what can it do about the client's unpaid position?
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The broker's obligation to NCCPL is separate from the client dispute. Once the trades are confirmed and cleared, the broker must meet the settlement obligation; it cannot simply 'reverse' exchange trades because the client denies them. If the client does not pay, the broker must fund the shortfall from its own resources or close out the client's position under the client agreement and applicable default procedures, after giving notice. It should not use other clients' cash or securities. The broker should notify NCCPL/compliance promptly if it expects a default, because late settlement can lead to close-out, penalties, or suspension. Any loss caused by the broker's own unauthorised execution may ultimately be the broker's, not the client's.
3. What investor-protection and complaint-handling steps should follow if the client formally disputes the trade?
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The client should be told how to file a written complaint with the broker's compliance officer and, if unresolved, with the PSX investor-protection/complaints mechanism and SECP. The broker must investigate whether the sales trader exceeded authority, whether the voice note was altered, and whether the client's account terms permit close-out. It should not retaliate or threaten the client. If the trade was unauthorised, the broker should correct the client's ledger and bear the loss; if authorised, it should document the instruction and pursue the unpaid amount through the contractual and exchange dispute process. A suspicious pattern may also require an internal report and staff disciplinary action.