Pakistan launches framework to allow minors to trade at PSX

The Pakistan Stock Exchange (PSX), National Clearing Company of Pakistan Ltd. (NCCPL) and Central Depository Company (CDC) have jointly issued new guidelines allowing minors under 18 to open and operate trading accounts through their legal guardians.

The “Minor Investor Accounts” framework, developed in consultation with the Securities and Exchange Commission of Pakistan (SECP), establishes procedures, documentation, and operational terms for opening and managing trading accounts on behalf of minors.

According to an official statement, the initiative aims to promote a savings and investment culture in Pakistan by enabling younger individuals to participate in the capital market under supervised arrangements.

Under the new rules, a guardian can open a trading account for a minor by submitting a Juvenile Card, Form-B, or Child Registration Certificate issued by NADRA. If the guardian is not the father, a court-issued Guardianship Certificate will also be required.

Each account will be titled as:
“[Name of Minor] (Minor) through [Name of Guardian] (Guardian).”

The guardian will be solely responsible for operating the account and fulfilling all compliance obligations, including anti-money laundering (AML) and counter-financing of terrorism (CFT) measures such as risk assessment, source of funds verification, and screening.

Receipts and payments for the account may be processed through the minor’s own bank account (opened through the guardian), a joint account, or the guardian’s personal account, as agreed with the securities broker. Brokers are instructed to process all payments strictly through these pre-approved channels.

The guidelines restrict minors from trading in high-risk or leveraged products such as futures contracts, leveraged financing (MTS, MFS, SLB), negotiated deals, or same-day square-ups.

To ensure a smooth transition once the minor reaches the age of majority, brokers and the NCCPL will monitor account ages and issue alerts one month before the investor turns 18. Upon reaching adulthood, the individual must open a new trading account in their own name, after which the existing minor account will be closed. All securities will be transferred to the new account without any capital gains tax implications, following the first-in-first-out (FIFO) principle.

The PSX said all securities brokers are required to comply with the new framework and its operational requirements.