ISLAMABAD: Finance Minister Shaukat Tarin will officially launch Pakistan’s first Professional Clearing Member (PCM) EClear Services Ltd, an entity set up by the Central Depository Company (CDC) under the SECP’s new broker regime.
The launch of PCM is a major milestone in the country’s stock trading market that will result in leveling the playing field in the stock market, promote transparent corporate structures and enhance confidence of investors and ensure organised development of the market.
Details revealed that the Securities and Exchange Commission of Pakistan (SECP) has introduced the new Broker Regime under the Securities Brokers (Licensing and Operations) Regulations in 2020 categorising securities brokers into three categories namely, trading and clearing, trading and self-clearing, and trading only.
One of the major requirements for the implementation of the new broker regime was the introduction of an independent third-party custodial, clearing and settlement service provider for the clearing and settlement of trades executed by trading only brokers.
The efforts towards bringing Pakistan’s capital markets at par with the international standards, and addressing the chronic issue of misappropriation of customer assets.
Around 25 trading only brokers have signed up for the services of the new PCM, according to the statement, and by December 2021, the SECP’s new brokers regime will be completely implemented, and all trading only brokers will start using the services of PCM by shifting their clearing, settlement and custody functions to PCM.
Globally called as General Clearing Member (GCM), the PCM is an international best practice of “Third Party Clearing” service providers. The procedure entails that clearing and custodial services are provided to trading members of the exchange, by an entity that is normally not a trading member of the exchange itself.