IFMP Stock Brokers Certification (SBC), Pakistan key terms

The apex statutory regulator of Pakistan's corporate sector and capital markets. It licenses stock exchanges, brokers and intermediaries, approves regulations, and supervises market conduct to protect investors and ensure fair, orderly markets.

A licensed marketplace where members trade listed securities under standardized rules and transparent price discovery. In Pakistan, exchanges operate as demutualized entities regulated by SECP, with trading, clearing and settlement functions separated.

A licensed intermediary that buys and sells securities on behalf of clients or for its own account through a stock exchange. Brokers must hold SECP registration, exchange membership and comply with client-money and conduct rules.

The segment where new securities are issued and sold for the first time, raising fresh capital for the issuer. Transactions occur between the issuer and investors, often through underwriters, before the securities are listed for trading.

The marketplace where already-issued securities are traded among investors, providing liquidity and price discovery without raising new capital for the issuer. Stock exchange trading of listed shares is the classic example.

The first sale of a company's shares to the public, converting it into a listed company and raising capital. In Pakistan it requires SECP approval, a prospectus, and subscription through the exchange's book-building or fixed-price process.

A formal disclosure document issued in a public offering that describes the issuer's business, financials, risks, use of proceeds and offer terms. It enables investors to make informed decisions and grounds liability for misstatements.

The admission of a company's securities to trading on a stock exchange after meeting eligibility criteria such as minimum capital, free float and disclosure standards. Listed firms must continuously comply with reporting obligations.

A financial institution that agrees to purchase any unsold portion of a new securities issue, thereby assuming the subscription risk for the issuer. Underwriting supports successful capital raising in the primary market.

A price-discovery method for public offerings in which investors submit bids at or above a floor price, and the final offer price is set from demand. It is commonly used for larger IPOs in Pakistan.

Pakistan's central securities depository, which holds securities in electronic book-entry form, maintains investor sub-accounts through participant brokers, and supports settlement of trades without physical certificates.

An electronic account maintained at CDC through a broker or other participant that records an investor's holdings of book-entry securities. It replaces physical share certificates and enables transfer and settlement by book entry.

A broker or bank approved by CDC to open and maintain CDS accounts for investors and to process settlement instructions. Participants act as the interface between investors and the central depository.

The entity that confirms, nets and guarantees trades between members, managing counterparty risk. In Pakistan, the National Clearing Company of Pakistan Limited performs this role for exchange trades.

The post-trade process of matching buy and sell orders, confirming trade details, netting obligations and calculating each member's settlement position. It precedes settlement and reduces the volume of payments and deliveries required.

The final discharge of a trade obligation through delivery of securities and payment of funds. Pakistan's equity market generally settles on a T+2 basis, meaning two business days after the trade date.

A settlement convention under which trades are settled two business days after the trade date. It defines when securities must be delivered and cash paid, affecting funding and delivery obligations for brokers and clients.

A settlement mechanism in which the transfer of securities occurs only if the corresponding cash payment occurs simultaneously, reducing principal risk. It links the securities leg and cash leg of a trade.

The offsetting of mutual obligations between parties so that only the net balance is settled. Bilateral and multilateral netting reduce the number and size of payments and securities deliveries needed after clearing.

Collateral or funds a client or member must deposit to cover potential losses on positions. Margin requirements protect the clearing system from default and may trigger calls for additional funds when prices move adversely.

A demand for additional collateral or cash when a position's margin falls below the required level due to adverse price movement. Failure to meet it can lead to forced liquidation of positions.

The mandatory process by which a broker identifies and verifies a client's identity, address, source of funds and risk profile before opening an account. It underpins anti-money-laundering compliance and investor protection.

A brokerage account opened in a client's name after KYC and agreement formalities, through which orders are placed and securities and cash are recorded. Client assets must be segregated from the broker's own assets.

An intermediary that solicits clients and routes orders on behalf of a registered broker under an agreement, without direct exchange membership. The principal broker remains responsible for the sub-broker's conduct.

Laws, regulations and procedures requiring brokers to detect, report and prevent the laundering of criminal proceeds, including suspicious transaction reporting and record-keeping. It complements KYC and customer due diligence obligations.

The framework of rules, compensation arrangements and enforcement actions designed to safeguard investors from fraud, misrepresentation and broker default. It includes segregation of client assets, disclosure duties and complaint mechanisms.

A fund maintained to compensate eligible investors for losses caused by the default or misappropriation of a broker or member. It is funded by contributions from market intermediaries under regulatory oversight.

Trading securities while in possession of material non-public information, or communicating such information to others who trade. It is prohibited as it undermines market fairness and price integrity.

Conduct intended to distort the price or volume of securities, such as wash trades, matched orders or spreading false information. Regulators prohibit it to preserve fair and transparent price discovery.

The obligation of issuers and intermediaries to publish timely, accurate information about financial results, material events and risks. Adequate disclosure supports informed investment decisions and deters fraud.

The ease with which a security can be bought or sold without materially moving its price, reflecting trading volume and market depth. Higher liquidity generally lowers transaction costs and improves price discovery.

The difference between the highest price a buyer is willing to pay and the lowest price a seller will accept. A narrow spread indicates a liquid, competitive market and lower trading costs.

An instruction to buy or sell a security immediately at the best available price. It prioritizes execution speed over price certainty, so the final price may differ from the quoted price in fast markets.

An instruction to buy or sell a security only at a specified price or better. It provides price control but may remain unexecuted if the market does not reach the stated limit.

The process by which brokers and exchanges identify, measure and control exposures such as credit, market and operational risk. Tools include position limits, margin requirements and capital adequacy standards.

The requirement that brokers and financial institutions maintain minimum net capital relative to their obligations and risks. It provides a buffer against losses and protects clients and counterparties.

The removal of a security from trading on an exchange, either voluntarily by the issuer or compulsorily for rule violations or failure to meet listing criteria. Delisting affects liquidity and investor exit options.