The Pakistan Stock Exchange (PSX) recently issued a notification regarding the implementation of a standard range/scale of brokerage commission with effect from 14th October (Monday).
According to the notice, the commission range of 3-paisa per share or 0.15pc of the transaction value (whichever is higher) up to 2.5pc of the transaction value is prescribed. The said notice also prescribes certain flexibilities and exemptions on nature of trades and executors (notice is available on PSX website).
PSX and the Securities and Exchange Commission of Pakistan (SECP) had observed that many brokerage houses were charging nominal or zero commission rates, which was adversely affecting true competition and creating a disadvantage for market participants in the form of disparity in service standards.
This implementation of a standard range of commission would be helpful in enhancing the quality standard of brokerage services including research, encouraging the expansion of distribution network for brokerage services, improving proficiency and technical infrastructure of brokers and maintaining a minimum level of governance and regulatory requirements. All these ensuing reasons will contribute to the economic progression and benefit investors at large in the long run.
As such, PSX, in the exercise of its statutory power to make regulations relating to brokerage and other charges and after following the due process including extensive consultations with all the stakeholders and with the approval of its Board and SECP introduced the standard range/scale of brokerage commission.