The Securities and Exchange Commission of Pakistan (SECP) has proposed introducing a referral program aimed at increasing investor onboarding in Pakistan’s capital markets.
Under the proposal, stock market brokers would be allowed to launch referral initiatives to encourage existing investors to bring new participants into the market. The plan is designed to broaden retail participation and improve investor outreach.
The proposed structured referral programs will be introduced through amendments to the Securities Brokers (Licensing and Operations) Regulations, 2016. In this regard, SECP has published a concept paper proposing the relevant regulatory amendments.
Under the proposed framework, brokers will be allowed to engage their existing clients (referrers) to introduce new investors through structured referral programs. These programs will operate under clearly defined terms and conditions specified by SECP to ensure transparency and investor protection.
The incentives offered under such programs will be non-cash, such as commission discounts, trading credits, or similar benefits. These incentives will be capped and time-bound for both the referrer and the new client. Brokers will also be required to clearly define the responsibilities, benefits, and conditions of the referral program, while remaining responsible for resolving any disputes arising under the scheme.
Referral incentive programs are widely used in many international markets, including the United States, United Kingdom, Switzerland, Hong Kong, Malaysia, and Singapore. Such programs typically offer benefits such as trading coupons, commission waivers, and reward points to encourage investor outreach.
SECP’s proposed framework seeks to align Pakistan’s capital market practices with international standards while maintaining appropriate regulatory oversight and investor protection.
The regulator believes the referral program could help expand the investor base by leveraging existing market participants to attract new investors.
The SECP has invited feedback from stakeholders on the proposed referral program before finalizing the framework for implementation.