KARACHI: The Pakistan Stock Exchange (PSX), together with the National Clearing Company of Pakistan Limited (NCCPL) and the Central Depository Company (CDC), has issued guidelines for opening and managing trading accounts for minors under 18 years of age.
The step, made with the help of the Securities and Exchange Commission of Pakistan (SECP), is meant to encourage saving and investment among young people and increase financial participation in the stock market.
Process and Guardian Role
The new rules explain how a “Minor Investor Account” can be opened and used under the supervision of a parent or legal guardian.
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Account Opening: The account must be opened by the minor’s father or a court-appointed guardian.
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Required Documents: The guardian must submit NADRA-issued documents of the minor such as a Juvenile Card, Form-B, or Child Registration Certificate. A Guardianship Certificate is needed if the guardian is not the father.
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Account Title: The account name will be written as “[Name of Minor] (Minor) through [Name of Guardian] (Guardian).”
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Operations: Only the guardian can give instructions for buying or selling shares.
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Compliance: All money-laundering and terrorism-financing checks will be done through the guardian.
Rules and Restrictions
To protect the minor’s money, some trading activities are not allowed in these accounts.
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No trading in futures or derivatives markets.
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Leveraged products like margin trading, margin financing, and stock borrowing are not allowed.
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Negotiated deals and same-day square-up trades are not permitted.
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Payments can be made from the minor’s own bank account, a joint account with the guardian, or the guardian’s account.
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When the Minor Turns 18
The framework also explains what happens when the minor becomes an adult.
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Alerts: Brokers and NCCPL will send alerts to the guardian and broker one month before the minor turns 18.
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Suspension: If the account is not converted to a regular account, it will be temporarily stopped. The account can only be used to sell existing shares.
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New Account: A new trading account must be opened in the adult’s name, and the old account will be closed.
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Transfer of Shares: The shares will be moved to the new account without any tax, keeping the same purchase date and cost.
This step by PSX, NCCPL, and CDC, under SECP’s guidance, will help young people learn about saving and investment from an early age.
