The stock market in Pakistan used to be owned by a few brokers who had the right to trade securities on the platform. However, in 2016, a group led by Chinese investors acquired a 40% shareholding and management control of the stock exchange. This led to the exchange being de-mutualised, separating ownership and trading rights. Despite this restructuring, the number of individual investors in the stock market has remained low, with only around 290,316 accounts at the end of July 2023. In comparison, there are around 10 million crypto wallets in Pakistan. Experts say that one reason for the limited outreach of brokerage businesses is their lack of focus on client servicing and on-boarding. Online-only brokers, regulated by the Securities and Exchange Commission of Pakistan, are expected to address this issue. These brokers will focus on trading and customer on-boarding, while outsourcing clearing and settlement services to a professional clearing member. This will reduce costs for the online-only brokers and allow them to increase customer outreach. The online-only brokers will not be allowed to undertake proprietary trading or deal in cash, which will be handled by the clearing member. The aim is to leverage technology to increase client outreach and expand services to previously unserved segments of society.

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By hassani

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