The Pakistan Stock Exchange (PSX), in collaboration with the National Clearing Company of Pakistan Limited (NCCPL) and the Central Depository Company (CDC), has introduced detailed guidelines for opening trading accounts for minors, marking a significant step toward fostering financial literacy and investment awareness among young Pakistanis. Developed in consultation with the Securities and Exchange Commission of Pakistan (SECP), these regulations outline the framework for minor investor accounts and the responsibilities of guardians overseeing such accounts.
Under the new guidelines, all securities brokers have been directed to strictly adhere to the prescribed procedures, ensuring compliance with operational requirements and regulatory standards. A “Minor Investor Account” may now be opened by a legal guardian submitting valid NADRA documents, including a Juvenile Card, Form-B, or Child Registration Certificate. Guardians other than parents are required to present a court-issued Guardianship Certificate to proceed.
The account setup process begins with preliminary checks, including all anti-money laundering and counter-financing of terrorism (AML/CFT) verifications, risk assessment, and source-of-funds validation conducted through the guardian. The trading account will be titled as “Name of Minor (Minor) through Name of Guardian (Guardian),” and brokers must mark it as a minor’s account in the UIN registration and UKN process. Until a separate functionality for minors’ UINs is introduced, the guardian’s UIN will be registered with NCCPL for settlement and capital gains tax purposes.
Guardians have exclusive authority to operate the account, and brokers are instructed to act solely on their directives. Transactions may be conducted through the minor’s bank account (opened via the guardian), a joint account with the guardian, or the guardian’s account. All payments and receipts must follow the agreed mode, ensuring transparency and accountability in fund management.
To safeguard young investors, restrictions have been placed on certain types of trading, including futures, leveraged products, negotiated deals, and same-day square-ups. These measures aim to prevent exposure to high-risk trading while the minor remains under legal guardianship.
A key provision of the guidelines addresses the transition when a minor reaches the age of majority. Brokers and NCCPL are tasked with monitoring the minor’s age using CNIC data and notifying guardians one month before the minor turns 18. Upon reaching majority, the account will be suspended for new trades until a regular trading account is opened in the individual’s name. During the transition, securities held in the minor account will be transferred to the new account while retaining cost and acquisition dates, applying the “First-in-First-Out” principle to avoid triggering capital gains tax.
The issuance of these guidelines by PSX, alongside coordination with NCCPL, CDC, and SECP, represents a progressive step toward promoting early financial engagement among youth. By providing a regulated framework for minor trading accounts, the initiative balances access to capital markets with strong protective measures, ensuring minors and their guardians can participate safely and responsibly.
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