PSX to issue 15 new brokerage licences.

KARACHI -- The Pakistan Stock Exchange (PSX) is looking to issue 15 new Trading Right Entitlement Certificates (TREC) licences that allow their holders to trade shares and other securities on the national exchange for either themselves or their clients.

TREC holders earn commissions on trading activity that takes place on the stock exchange. Of the 279 TREC holders at the end of 2021-22, 155 were based in Karachi, 79 in Lahore and 45 in Islamabad.

About 200 brokers owned the erstwhile Karachi Stock Exchange besides reserving the right to trade securities on the platform until 2016 when a consortium led by Chinese investors acquired a 40 per cent shareholding and management control of the bourse.

The transaction not only reduced the shareholding of brokers but also separated ownership and trading rights through a process called demutualisation.

The post-demutualisation era has seen a small increase in the number of TREC holders, thanks to the liberalisation of the licensing regime.

The TREC holder can earn up to 0.15pc of the transaction value on every transaction. According to a study that the PSX carried out using statistics for the second half of 2021, a TREC holder can make a minimum revenue of Rs180,125 per day by capturing just 1pc of the regular market turnover. That's based on the fact that the average daily value of transactions during the six-month period in the regular market was Rs12bn.

Similarly, a relatively strong TREC holder controlling a market share of 5pc in terms of the average turnover makes a top line of almost Rs1 million...