PSX gives you Sahulat to open your brokerage account
The facility, which was only available to overseas Pakistanis, has finally been extended to those undersea By Ariba Shahid While overseas Pakistanis could open up an account online to trade stocks at the PSX, local residents (or as the meme-ers call them, underseas Pakistanis) could not until this week. In an attempt to bring up the meager number of investors at the Pakistan Stock Exchange (PSX), the bourse has introduced Sahulat Account Service which simplifies the investment process. “We worked closely with the State Bank and SECP and convinced them, particularly the central bank, that banks can share KYC and customer information with brokers. It works quite well for Roshan Digital Accounts. You can be sitting anywhere in the world, not only can you open your bank account digitally but you can also open your brokerage account digitally. Why not extend the same to Pakistanis living here? They should have the same facilities” said Farrukh H Khan, the MD and CEO of the PSX. It is important to note that RDA accounts are fully digital from the get go. Local bank accounts, however, haven not always been as digital as they are now. “The difference between RDA and local is that RDA starts as a digital experience, while for most local bank accounts, the initiation was not digital,” says Khan.
What do you need?
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asically, all you’ll need to open an account is a CNIC or an SNIC. You do not need to provide any evidence or proof of your income source. The accounts will be sahulat accounts, and you can invest a maximum of Rs 800,000. all licensed financial security brokers offer the Sahulat account facility In a statement, Khan said, The Sahulat Account involves an extremely simplified and straightforward process of account opening,” “Coupled with recent improvements in online account opening and local KYC sharing, it has never been easier for individuals to open
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a brokerage account and benefit from investing in the stock market,” First things first, you have to pick a broker. Fill out a simple form, provide a copy of your CNIC and you’re good to go to invest on the PSX.
Why this is important
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he more investors there are at the stock exchange, the more listings you have, and the more documented the economy is. Pakistan has approximately 540 companies listed on the Pakistan Stock Exchange. Let’s compare the number of listings in South Asia. India has 5,034 companies listed on the Bombay Stock Exchange, 3500 on the Calcutta Stock Exchange, and 1300 on the National Stock Exchange of India located in Mumbai. Bangladesh has 750 listings on the Dhaka Stock Exchange, and 293 on the Chittagong Stock Exchange. Sri Lanka has 285 listed companies, Neal 230, Bhutan 20. Just a small reminder, the PSX is a combination of the Islamabad Stock Exchange, Lahore Stock Exchange, and the Karachi Stock Exchange. The fact that the sole stock exchange in Pakistan has less listings than either of the three exchanges in India, or the Dhaka Stock Exchange is a wake up call. Moreover, this also makes it easier for those that live in cities that do not have brokerage offices to open up accounts. The use of digital means to open an account, however, helps bridge that gap. “If you were sitting in Sukkur and you opened an account- the broker had to send, or you had to come to Hyderabad or Karachi where the broker’s branch was to do a biometric verification to get your account opened. So we’ve worked with the regulator, and we’ve taken away the requirement for the biometric verification,” explains Khan. Khan explains that biometric verification is no longer needed because you’re already verified against your CNIC, bank account, and of course mobile number. “Because when you open
an account you already have a biometric for your mobile phone, for your CNIC, for your bank account, etc. We’ve worked on that to simplify it. We’ve also simplified the account opening form. This not only makes it easier for the investor but also the broker.”
Why aren’t there enough investors in Pakistan
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he answer is usually the same old story, citizens are scared, better returns on interest income, lack of corporate governance, low financial literacy and low financial inclusion. However, the answer is far simpler. The reason we have few investors is because the process of opening an account is long and tiring. The number of documents you have to submit just acts as a deter. If you decide to open a regular brokerage account online, you have to go onto their website, and fill out an account opening form. You will have to provide some documents which include a copy of your CNIC and the CNIC of joint applicants (if any), a duly attested by a notary public employee card/ job card for salaried individuals, company letterhead for business individuals mentioning the name, CNIC, designation, etc, salary slip for salaried persons, income statement for business individuals, copy of utility bill/ drivers’ license/ rent agreement, and zakat declaration. Basically, you have to provide the broker with all these documents, probably even name your first born after them considering how exhaustive the list is. This is because of the extra stringent KYC measures Pakistani financial institutions have to undertake. While they help keep the financial transactions of the country clean, they also act as a deter for formalization. However, if you’re keen on investing in the PSX and you want to keep your exposure upto Rs 800,000 you could open up a Sahulat Account and save your time and effort. n
