SECP proposes referral incentive programs to increase investor participation

The Securities and Exchange Commission of Pakistan (SECP) has proposed introducing referral incentive programs aimed at increasing participation in the country’s capital market.

The regulator said the initiative would allow existing investors to refer new clients to securities brokers under a structured framework.

“The Securities and Exchange Commission of Pakistan (SECP) has proposed the introduction of referral incentive programs to encourage greater investor participation in the capital market,” the statement said.

According to the SECP, the proposed programs will be implemented through amendments to the Securities Brokers (Licensing and Operations) Regulations, 2016, and a concept paper outlining the regulatory changes has been published.

Under the proposed framework, brokers would be allowed to engage their current clients as referrers who can introduce new investors through structured referral programs operating under clearly defined terms and conditions.

“These programs will operate under clearly defined terms and conditions specified by SECP to ensure transparency and investor protection,” the regulator said.

The incentives under the scheme will not be paid in cash. Instead, investors may receive benefits such as commission discounts, trading credits, or similar rewards. The SECP said these incentives would be capped and time-bound for both the referring client and the new investor.

“The incentives offered under such programs will be non-cash, such as commission discounts, trading credits, or similar benefits,” the statement said.

Brokers will also be required to clearly outline the responsibilities, benefits and conditions of the referral programs and will remain responsible for resolving disputes that may arise.

The regulator noted that similar referral programs are widely used in international financial markets, including in the United States, United Kingdom, Switzerland, Hong Kong, Malaysia and Singapore, where they help expand investor outreach.

According to the SECP, the proposed framework aims to align Pakistan’s capital market practices with international standards while maintaining regulatory oversight and investor protection.

The initiative is also expected to support client onboarding and broaden the investor base in Pakistan’s capital market.

The SECP has invited stakeholders to provide feedback on the concept paper within fifteen days of its publication, with comments to be submitted via email.