Circulars/Notifications - Exchange Policy Department  
 FE Circular No. 02 of 2022

April 07, 2022

The Presidents/Chief Executives of all
Authorized Dealers in Foreign Exchange

Dear Sir/Madam,

Remittance of Commission earned by International Brokers Dealer for facilitating Portfolio
investment of their foreign clients in Pakistan


            In order to facilitate foreign portfolio investment in the country through International Broker Dealers (IBD), it has been decided to allow general permission to Authorized Dealers (ADs) for remitting the share of commission to such IBD by Local Broker Dealers (LBD). Accordingly, following new para is being inserted in Chapter 14 of Foreign Exchange Manual:

“28B. Payment of commission to International Broker Dealers: Authorized Dealers (ADs) may allow remittance of due share of commission by Local Broker Dealer (LBD) to International Broker Dealers (IBD) against all those settled trades of securities, which have been initiated by IBD for direct execution through LBD, on behalf of their non-resident investors (SCRA holders), subject to compliance of following terms and conditions:

  1. The LBD shall be a Securities Broker in terms of Securities Brokers (Licensing and Operations) Regulations of Securities and Exchange Commission of Pakistan (SECP).
  2. IBD shall be a foreign entity engaged in the brokerage business that has entered in to an agreement with LBD for sharing of brokerage commission arising from buying/ selling of securities in Pakistan on behalf of non-resident clients of IBD.
  3. The LBD shall submit an application for remittance duly signed by CFO along with an undertaking that amount requested has not been remitted abroad from Pakistan earlier and duly filled Form-M.
  4. The LBD shall provide a copy of valid underlying contract. The contract shall include name of IBD, applicable rate of commission, periodicity of payment etc.
  5. The LBD shall provide the detail of deals, against which commission is being remitted. The detail shall include name of the foreign investor & UIN, IBD Name & No., Custodian/Settlement Bank Name & No., trade (sale/purchase), name and quantity of security, price, commission earned, applicable Taxes and Net share of commission due for remittance, etc. The details should be verified by CFO of the LBD and counter verified by National Clearing Company Pakistan Limited (NCCPL) and Settlement Bank/AD with respective authorized Signatures and Stamp.
  6. The amount of commission (net of applicable taxes) to be remitted, shall not exceed the amount determined as per rate prescribed by Pakistan Stock Exchange (PSX) or the rate agreed in the agreement, whichever is lower.”

2.            The ADs are advised to bring the above amendments to the notice of all their constituents for meticulous compliance.

Yours truly,


(Athar Ghafoor)
Additional Director

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