Pakistan Stock Exchange (PSX) has finalised the standardisation of its brokerage commission rates – (5 paisas or 0.25% : whichever is higher ) on different types of transactions. The resolution was passed by the board at a meeting held on January 09, 2017.
PSX claims to have been receiving verbal and written representations at various forums by securities brokers of PSX, for resorting to regulatory requirements by introducing standard range/scale of brokerage commission.This is believed to be a critical measure in attracting healthy competition in the market. Furthermore, the move will act as a catalyst for market development, curtailing exploitative practices, supporting commercial viability of brokerage industry and help foster economic growth.
“The board decided to recommend a formula based range/scale of brokerage commission from Rs 0.05 per share or 0.25% of transaction value whichever is higher to 2.5% of transaction value by Brokers of the Exchange for transactions in the Ready Market and day-trade transactions. However, in case of day trading, the commission may be charged on only one side of the round trip of buy or sale transactions on the same day in the same scrip. The Chairman suggested a letter seeking required exemption from CCP should be sent to CCP.”
The rate is applicable to:
1) Every ready market normal buy and sell transaction not squared during the trading day.
2)Every ready market intra-day squared transaction either on a buy side or sell side trade.
3)For the futures arbitrage, if bought in ready, sold in DFM by the same client, the same security on the same trading day , otherwise the commission applies to both buy and sell sides.
4)Similarly, the rate is applicable on ready market MTS financed purchase and sale transactions only. There is no minimum commission on MTS market transactions.
5)If the transaction is squared-up in DFM either through an offsetting transaction or rollover.
6)There is to be no commission on proprietary trade.
The introduction of standardised commission is in complete harmony with the specific powers provided to the Exchange through section 7(1) (w) of the Securities Act 2015 for framing regulations and has been with the prior approval of SECP.
The decision comes in the wake of the brokerage industry being unregulated in terms of the brokerage fees that have continued to be charged. The fees charged had been dependant upon the type of clients based on quality of service thus the initiative is believed to expand outreach of brokers and tap on unexplored geographical and demographic market segments.
