SECP Makes it Mandatory for Clearinghouse to Maintain Paid Up Capital of Rs. 1 Billion

The Securities and Exchange Commission of Pakistan (SECP) has made it mandatory for the licensed “Clearinghouse” to maintain paid-up capital of Rs. 1. billion at all times and net worth of Rs. 2.00 billion by June 30, 2023.

The SECP has issued S. R. O.1252(I)/2020 here on Wednesday to specify new financial resource requirements for the Clearing House.

SECP officials told ProPakistani that the Clearing Houses (Licensing and Operations) Regulations, 2016 has specified the financial resource requirements for applicants seeking licenses of the Clearing House from the SECP.

Under regulation 4 of the Clearing Houses (Licensing and Operations) Regulations, 2016, the applicant shall have an initial paid-up capital and net worth of not less than Rs. 1 billion.

Provided that the Commission may require the clearinghouse to maintain a higher paid-up capital and net-worth in a progressive manner.

An applicant seeking a license as a clearinghouse shall pay an amount of Rs. 1 million as a license fee and submit the requisite documents along-with its application.

An existing clearinghouse shall, within a period of three months, or such extended period as may be allowed by the Commission, from the date of commencement of these regulations, submit a report by an independent expert appointed by the clearinghouse with the approval of the Commission to evaluate current and projected risks associated with clearing house operations and recommend optimal levels of capital for the clearinghouse.

The Commission will determine paid-up capital and net-worth requirements for the clearinghouse to be complied with in a progressive manner after reviewing the report of the expert. For the purpose of these regulations, net worth shall be calculated as total assets less total liabilities less surplus on revaluation, if any, created upon revaluation of fixed assets, they added.

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