SECP approves framework for digital onboarding of investors

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has approved a framework to enable all Pakistani resident and non-resident investors to open online accounts in the capital market. 

The new regime, that is part of SECP’s digital transformation agenda, allows investors to seamlessly open his or her account with a broker from anywhere in the country without the requirement of submitting any physical documents or visiting a broker.

The new hassle-free process will enable investors to carry out trade activities smoothly. However, to ensure maximum investor protection, an alternate online customer verification process has been introduced for opening online accounts. The verification will be conducted independently by the Centralised Know Your Customer (KYC) Organisation. 

Profit has learnt that some brokers are already taking investors onboard via digital accounts while many others are in the process.

In addition, the account opening process has also been made simpler by reducing the number of pages that investors need to sign. The new account opening system, which can be opened for all types of accounts that brokers open, is a continuation of SECP’s reform agenda that aims at enhancing investor outreach, introducing digitisation and ensuring robust growth of the capital markets. 

A sizable investor base is a crucial stepping stone for the development of any capital market and is, therefore, part of the major objectives of the SECP.

It is expected that the new regime would revolutionise Pakistan’s capital markets and contribute significantly towards economic growth in the country by channelling investments and savings through the market.

Earlier on November 11, the SECP had acknowledged the critical need to formulate regulatory measures for the virtual industry. According to the regulatory watchdog, a virtual asset is a digital representation of value that can be digitally traded, or transferred, and can be used for payment or investment purposes.

It said that even though the full-scale misuse of virtual currencies, provided the reluctance to regulate it, is unknown; however, its market value has been reported to exceed €7 billion worldwide.

After comparing the proposed framework for crypto assets in other countries, SECP was of the view that regulating this regime of digital finance will hike capacity in financial markets while allowing more liquidity flow in secondary markets of the country.

The SECP noted that whatever innovation it can bring to the financial sector can only be assessed if regulatory frameworks to protect investors and make larger financial inclusion a possibility are in place.