PMEX BROKER REGISTRATION

PROCESS
Pakistan Mercantile Exchange Limited (PMEX)

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PMEX Broker Registration Process
PMEX BROKER REGISTRATION PROCESS

In order to become a PMEX Broker, following steps would be adopted by

client.

Step 1:

Apply to SECP for obtaining pre-approval. In this respect, appended

Form (A) along with Documents / Information listed in Annexure – (A)
need to be filled out by client and submit them to the Securities and
Exchange Commission of Pakistan (SECP).

(FORM A)

APPLICATION FOR PRIOR-PERMISSION TO UNDERTAKE FUTURES BROKER

ACTIVITY
Dated:

To

The Securities and Exchange

Commission of Pakistan,
Islamabad.

Dear Sir,

We hereby apply for grant of permission under regulation 5 of the Futures Brokers (Licensing and
Operations) Regulation, 2018, to form a Futures Broker Company under the name and style of * ------
---------------------------------------

The information and documents as required in the Annexure A to this form duly verified and signed
by all sponsors and proposed directors along with an affidavit by them as to the correctness of the
details is submitted.

We undertake to keep this information up to date by communicating changes or modifications

therein within fourteen days of such changes or modifications.

Yours faithfully,

-------------------------------------
Verification by
Oath Commissioner
Name of the Company

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PMEX Broker Registration Process
 ANNEXURE – A

INFORMATION TO BE SUPPLIED TO UNDERTAKE FUTURES BROKER ACTIVITY

Documents Attached / Not

Applicable
Information of each sponsor, proposed director, proposed chief executive and proposed chairman
of the Board as per the attached form. (Institutional sponsors shall mention their names and
addresses only).
Copies of annual accounts of such companies and firms for the last three years along with
summary of their paid-up share capital, free reserves, profit after tax and dividend payment to
be provided in which the aforesaid sponsors, proposed chief executive and proposed
chairman are or have been directors, partners or office holders during the last ten years.
Documentary evidence of financial standing, educational as well as professional qualifications
and experience of each sponsor, proposed director, proposed chief executive and proposed
chairman of the Board.
Percentage of capital, each sponsor proposes to contribute in the proposed company.
Feasibility report of the proposed company.
Names of the bankers of the sponsors’ along with their account numbers.
Draft of the Memorandum and Articles of Association including the paragraph as per
specimen Object Clause attached

Affidavit from each sponsor, proposed director, proposed chief executive and proposed
chairman of the Board, stating that

a) he has not been associated with any illegal banking business, deposit taking or financial
dealings;

b) he and companies in which he is a director or substantial shareholder have no over-due

loans or installments outstanding towards banks or other financial institutions;

c) neither he nor companies in which he is a director or substantial shareholder has

defaulted in paying taxes as on the date of application;

d) he has not been promotors or sponsor, director or chief executive of a defaulting

cooperative finance society or finance company;

e) he has never been convicted of fraud or breach of trust or of an offence involving

moral turpitude or removed from service for misconduct; and

f) he has neither been adjudged an insolvent nor has defaulted in making payments,
to his creditors;

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PMEX Broker Registration Process
Information to be provided by individual sponsors, directors and senior management officers of the
_____________________________ (name of futures broker)

1. Curriculum Vitae / Resume containing:

a) Name:
b) Father or Husband’s Name:
c) CNIC No. (attach copy):
d) Latest photograph:
e) Nationality:
f) Age:
g) Contact details
(i) Residential Address:
(ii) Business Address:
(iii) Telephone No.:
(iv) Mobile No.:
(v) Fax No.:
(vi) Email:
h) National Tax No.:
i) Present Occupation:
j) Qualification(s)
(i) Academic:
(ii) Professional:
k) Experience: (Positions held during the last 10 years along with name and address of company/
institution) information to be provided on the following sample format*
SN Name and Address of the Organization Designation Period (From – Till)
1.
2
2.
1. Nature of directorship Executive Non-executive

2. Status of directorship Nominee Independent Elected Director

Director Director

Number of shares subscribed or held:

Nominated by (Nominating entity):

3. Names of companies, firms and other organizations of which the person is presently a director,
partner, office-holder or major shareholder (Information to be provided on the following sample
format*)
SN Name and Address of the Organization Designation Period (From – Till)
1.
2.
4. Name of any persons on the board of (name of futures broker) who are related to the applicant

*Use additional sheet wherever required.

Signatures: ______________________

Date: ___________________

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PMEX Broker Registration Process
Step 2:

Once the approval is received from SECP, Client need to *incorporate a

“Company” by including the following object clauses for brokerage firm in
the company’s Memorandum of Association.

Specimen Object Clauses in Memorandum of Association of Corporate

Member

1. To act as a member of Pakistan Mercantile Exchange Limited and to carry on

the business as broker in all Futures Contracts registered with PMEX in or
outside Pakistan under broker registration license and subject to meeting all
legal and regulatory requirements as specified by the Commission or relevant
legal jurisdiction from time to time

2. To engage in the futures trading in commodities such as gold, cotton, cotton

yarn, wheat, rice, sugar and any other commodities as allowed by the Pakistan
Mercantile Exchange Limited.

3. To establish ready, future, forward contract and conduct business of

commodity in or outside Pakistan and to perform all allied and incidental
functions in order to facilitate, set-up and carry on the business of all kind of
commodities.

4. To buy and sell all kind of commodities and engage in the export and import
business of all kind of commodities.

5. To facilitate the shipment, delivery, loading, carriage by land, sea and air
delivery and insurance of commodity and to take such actions as the company
may think fit.

6. To open branch or branches in any place in Pakistan or arrange franchise as

may appear necessary or desirable to the Company.

* In order to incorporate a company, client will be contacting to relevant

consultant.

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PMEX Broker Registration Process
Step 3:

After incorporation of a company, client will apply for PMEX Membership

by providing the following documents.
Documents Yes/No/N/A
SECP certified true copy of Certificate of Incorporation and Memorandum &
Articles of Association
SECP certified true copy Certificate of Commencement of Business, in case of
Public Limited Company
Certified copy of Board Resolution authorizing the application and chief executive
for PMEX Membership (Annexure –
A)
List of Directors on the Company’s letterhead
List of Shareholders along with shareholding pattern on the Company’s letterhead
identifying Sponsor shareholders separately
Attested copies of CNIC / Passport of all directors
Notarized attested copies of Educational Certificates all directors, sponsor
shareholders and senior management officers including Chief Compliance Officer as
per fit and proper criteria
Notarized attested copies of Experience Certificates of all directors, sponsor
shareholders and senior management officers including Chief Compliance Officer
as per fit and proper criteria
Evidence of Net Worth and Paid Up Capital of Rs. 20 million
Statement of Net Capital Balance of minimum PKR 5 million as per format
prescribed in Schedule II
Affidavit on a non-judicial stamp paper of PKR 50/- (Annexure
D)
Undertaking in the prescribed format (Annexure E)
Reference letter from Principal Bank
Certified Copies of Form 3, 27, 28, 29 and Form A, as applicable
Latest filed income tax return of the company, if available
Latest annual audited financial statements of the Company, if available
Company Profile
Pay Order / Demand Draft of Membership Admission fee:
 Rs. 3,500,000 for Universal Membership
 Rs. 1,000,000 for Commodity Specific Membership payable to “Pakistan
Mercantile Exchange Limited”
 Rs. 25,000 for processing fee

Completed membership application form duly signed and stamped (Annexure F)

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PMEX Broker Registration Process
Step 4:

After fulfilling the requirements of PMEX Membership, PMEX grants a

Membership to client. After that PMEX member shall apply for SECP Broker
Registration by providing the following documents.

Application and procedure for granting a License:

(1) An application for a license as a futures broker shall be made to the

Commission in Form – A-I (attached) along with the information and
documents specified in Annexure – A-I (attached) and receipt evidencing
payment of non-refundable fee of such amount as specified in Schedule I
(attached).

(2) A company applying for license under sub-regulation (1) shall submit
its application along-with the supporting information and documents
through the futures exchange to the Commission. Subsequently, PMEX
shall scrutinize the application and forwarded to the SECP for granting a
license to the Member.

(3) Any subsequent change in the information provided to the Commission

at the time of filing of application shall be communicated to the Commission
within five working days from the date of such change.

Form – A-I

FORM OF APPLICATION FOR LICENCE AS A FUTURES BROKER

To
The Securities and Exchange Commission of
Pakistan, Islamabad.

Dear Sir,

1. We (Name of the company) hereby apply for licence of futures broker, being
member of (name of futures exchange) under section 51 of the Futures Market Act, 2016.

2. Certified true copies of all the documents specified in Annexure A-I of the Futures
Brokers (Licensing and Operations) Regulations, 2018 are enclosed.

3. Original receipt of the bank for the fee of Rs.............................being the licensing fee
is enclosed.

Yours faithfully,

Signature of the Chief Executive

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PMEX Broker Registration Process
 Annexure – AI of Futures Brokers (Licensing and Operations) Regulations, 2018
Information and Documents to be provided along with application for license as a futures broker
1 General and business information Attached / Not
Applicable
1.1 A. Brief history of applicant containing name of the applicant, date and place of its
incorporation and date of commencement of business
B. In respect of sponsors, directors and senior management officers: names, contact
details, group structure, length of experience as futures broker
1.2 Address of the registered office of the applicant (postal address, postal code, telephone No.,
fax No.)
1.3 Mailing address of the applicant (postal address, postal code, telephone No., fax No., Email
address of the concerned officer of the applicant)
1.4 Percentage of capital, each sponsor has/proposes to contribute in the company
1.5 Name of the futures exchange of which the applicant is a TRE certificate holder, along with
the TRE Certificate number
1.6 Details of any outstanding legal proceedings initiated by the Commission or any other
regulatory authority against: applicant, directors, or Senior management officers
1.7 Details in case the applicant or any of sponsors, directors, major shareholders or senior
management officers has been declared insolvent or bankrupt, or declared defaulter by any
authority
1.8 Details of any penal actions taken during the last three years by the Commission or any other
regulatory authority against applicant, sponsors, directors, major shareholders, or senior
management officers
1.9 In case any associated company of the applicant is already licensed under the Securities Act,
2015 or the Futures Market Act, 2016 the following details shall be provided, namely:
 Name of such associated company;
 Details of warning notices, if any, issued to such associated company by the
Commission;
 Details of legal proceedings, if any, initiated against such associated company by the
Commission or any other regulatory authority; and
 Penal action, if any, taken against such associated company by the Commission during
the last three years.
2 Details of infrastructural facilities
2.1 Computer systems installed:
 hardware configurations
 software used
2.2 Data processing capacity:
 available infrastructure (computers and other electronic equipment used for data
processing and communication);

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PMEX Broker Registration Process
  available manpower
 office space (mention extent of area in square feet available)
3 Other Information
3.1 Details of all pending disputes in which the applicant is a party as follows:
 Name of the party
 Name and place of court / tribunal where dispute is pending
 Amount involved
 Pending since
 Date of last hearing
 Decision at last hearing
3.2 List of civil and criminal offenses in which the applicant or any of the sponsors, directors, or
senior management officer has remained involved during the last three years
3.3 Any other information considered relevant to the business of the futures brokers
3.4 Any significant awards or recognition, collective grievances against the applicant
4 List of documents to be provided along with application
4.1 CRO certified copies of following:
 Memorandum and Articles of Association
 Certificate of Incorporation
 Certificate of Commencement of Business (where applicable)
4.2 CRO certified copies of Form A, Form 3, Form 27, Form 28, Form 29
4.3 Audited accounts for the last three years, and latest half-yearly and quarterly accounts, where
applicable.
4.4 Copies of documents evidencing compliance with the financial resource requirements
specified in the Futures Brokers (Licensing and Operations) Regulations, 2018.
4.5 Profile of the applicant and information of its sponsors, senior management officers and
directors as per the attached format along with fit and proper related documents
4.6 An undertaking from the directors of the applicant and sponsoring company, if any, that they
will inform the Commission in case of any change in the sponsors or majority shareholders, if
any, of the sponsoring company.
4.7 An undertaking that the applicant, its directors, sponsors, and senior management officers are
in compliance with all the requirements for grant of a license under the Futures Brokers
(Licensing and Operations) Regulations, 2018.
4.8 Names, addresses and particulars of any business carried on by each person holding 10% or
more in the share capital of the applicant
4.9 Pattern of shareholding, identifying separately the sponsors and shares held by the sponsors
4.10 Bank details along with bank statement of the applicant since its inception duly signed and
stamped by bank manager.

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PMEX Broker Registration Process
4.11 Details of the affiliation and outsourcing contracts, if any.
4.12 Prior-permission of SECP to undertake the futures broker activity under Regulation 5 of
Futures Brokers (Licensing and Operations) Regulations.
4.13 Any other information / document as required by the Commission.

Note: In case any of the above documents/information have already been submitted to the Commission, the
applicant may only provide an undertaking that there is no change in the earlier submitted
document/information.

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PMEX Broker Registration Process
 Schedule II
COMPUTATION OF NET CAPITAL BALANCE

Current assets and current liabilities in relation to a futures broker for the purpose of net
capital shall be determined by accounting for the current assets and liabilities in the
following manner:
A – Description of Current Assets Valuation basis
1. Cash in hand or in bank (including As per book value
customers bank balances)

2. Margin Deposits with futures/securities As per Book Value

exchange

3. Term Deposit/Other Deposit Receipts As per Book Value

with Banks

4. Trade Receivables Book Value less those overdue for more

than fourteen days

5. Investment in listed securities in the Securities on the exposure list marked to

name of broker market less 15% discount;

6. Securities purchased for customers Securities purchased for the customer and
held by the broker where the payment has
not been received within fourteen days

7. Investment in futures contracts in the Report to the extent of MTM margins

name of broker

8. Listed TFCs/ Corporate Bonds of not less Marked to Market less 10% discount
than BBB grade assigned by a credit
rating company in Pakistan

9. PIBs Marked to Market less 5% discount

10. Treasury Bill At market value

11. Stock in trade As per book value

12. Other current asset specified by the As per the valuation basis determined by the
Commission Commission
B – Description of Current liabilities Valuation basis

1. Trade payables Book Value less those overdue for more

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PMEX Broker Registration Process
 than 30 days

2. Other liabilities As classified under the generally accepted

accounting principles

Guidelines issued by the Commission from time to time shall also be followed while calculating the
Net Capital Balance.

The Net Capital Balance Statement shall exclusively be prepared for Futures Brokers and not to
be used for any other purposes.

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