PSX invites public comments on proposed regulatory amendments

November 07, 2025 (MLN): Pakistan Stock Exchange Limited (PSX) has invited public comments on a series of proposed amendments to its regulations that aim to further enhance regulatory oversight, operational efficiency, and transparency in the capital market.

The proposed changes pertain to three key areas: mandatory presence of Chief Executive Officers (CEOs) in appeal hearings, regulatory requirements related to Internet-Based Trading Services (IBTS) provided by Trading Only and Online Only Securities Brokers, and revisions to arbitration and appeal procedures governing trade-related disputes and complaints, according to a notice by PSX.

Under the first proposal, PSX has suggested amendments to Regulation 5.21A and Regulation 20.4A, which grant listed companies and securities brokers the right to appeal against enforcement orders issued by the Chief Regulatory Officer (CRO).

Currently, these regulations encourage the CEO of the listed company or securities broker to attend the hearings before the Appellant Committee.

However, PSX now proposes to make the CEO’s presence mandatory in all such hearings. The rationale behind this amendment is to ensure that the appeal process benefits from the CEO’s direct involvement and understanding of the issues under review. PSX believes that the CEO’s participation in hearings demonstrates commitment, seriousness, and accountability on the part of the appellant company, while also adding credibility and depth to the information presented before the Appellant Committee.

According to the proposed framework, other relevant officials of the appellant company and consultants may accompany the CEO during the hearing. In exceptional circumstances where the CEO is unable to attend due to unavoidable reasons, the CEO may authorize a senior management officer who is well conversant with the matter to represent the company, provided that the authorization is made in writing and cogent reasons for the CEO’s non-participation are submitted.

These amendments, detailed in Annexure A, are intended to strengthen the integrity and effectiveness of the appeal process by ensuring that the highest executive authority of the company directly engages in regulatory proceedings.

The second proposal relates to Internet-Based Trading Services (IBTS).

As per existing regulations, securities brokers are required to have their IBTS systems independently audited and penetration tested every two years by a PSX-approved audit firm, with the audit report submitted within two months of the close of the vulnerability assessment.

For Trading Only and Online Only Securities Brokers who utilize the IBTS systems provided by the Professional Clearing Member (PCM), compliance with this timeline has proven challenging.

This is because a large number of brokers rely on the same IBTS infrastructure provided by PCM, making it impractical to conduct separate audits and penetration tests within the two-month period preceding each broker’s submission deadline.

To address this operational challenge, PSX is proposing to waive the time-related condition that requires the vulnerability assessment and penetration testing to be conducted within the last two months of the audit report submission for brokers who have availed the PCM’s IBTS systems.

The requirement for independent auditing and penetration testing will remain intact; however, the proposed change will provide necessary flexibility in timing without compromising the integrity and security of the trading systems. The relevant amendments are detailed in Annexure B of the proposal.

The third area of proposed reform focuses on enhancing the efficiency, clarity, and transparency of arbitration and appeal procedures relating to trade-related disputes and complaints.

These changes are designed to streamline processes and ensure timely resolution of investor claims and disputes.

PSX has proposed the insertion of a clause emphasizing the obligation of securities brokers to handle client complaints and disputes in accordance with their internal complaint-handling procedures.

In addition, PSX has proposed that the selection of industry experts who serve as members of the Appellate Panel or as Sole Arbitrators be conducted through a system of random balloting, ensuring fairness and impartiality in the selection process.

Another important proposed clarification specifies that the filing of a petition or application in a court of law by any disputing party shall not affect or suspend the arbitration or appeal proceedings at PSX, thereby preventing delays caused by parallel legal actions.

To further promote timely resolution, certain procedural timelines within the arbitration and appeal processes are proposed to be shortened.

Furthermore, the size of the Appellate Panel is proposed to be reduced for efficiency: from the current five members to three members in the case of an appeal against an award announced by a Sole Arbitrator, and to four members in the case of an appeal against an award announced by a Sub-Panel of Arbitrators.

These measures, elaborated in Annexure C, are aimed at improving the operational efficiency and transparency of PSX’s dispute resolution mechanism while ensuring that investor grievances are addressed in a fair and timely manner.

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