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Sub Broker Agreement for Pakistan

Sub Broker Agreement Template for Pakistan

A Sub Broker Agreement is a legally binding document used in Pakistan's securities market that establishes the relationship between a principal broker and a sub-broker. The agreement must comply with the Securities and Exchange Commission of Pakistan (SECP) regulations and the Securities Act, 2015. It outlines the terms under which a sub-broker can conduct securities trading activities under the principal broker's license, including commission structures, compliance requirements, operational procedures, and risk management protocols. The document incorporates specific Pakistani regulatory requirements while defining the rights, obligations, and liabilities of both parties.

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What is a Sub Broker Agreement?

The Sub Broker Agreement is essential for securities trading operations in Pakistan where a licensed broker wishes to expand their business through sub-brokers. This document is required by the Securities and Exchange Commission of Pakistan (SECP) and must comply with the Securities Act, 2015 and related regulations. The agreement covers crucial aspects such as licensing requirements, operational procedures, commission structures, compliance obligations, and risk management protocols. It's particularly important when a principal broker wants to delegate certain trading activities while maintaining regulatory oversight and control. The document includes specific provisions for Pakistani market operations, including references to local stock exchange rules and anti-money laundering requirements.

What sections should be included in a Sub Broker Agreement?

1. Parties: Identification of the Principal Broker and Sub-Broker with complete details including registration numbers and SECP licenses

2. Background: Context of the agreement, including the Principal Broker's authority and intention to appoint the Sub-Broker

3. Definitions: Definitions of key terms used throughout the agreement, including regulatory terms from SECP regulations

4. Appointment and Scope: Terms of Sub-Broker appointment and scope of authorized activities

5. Rights and Obligations of Sub-Broker: Detailed responsibilities, compliance requirements, and operational duties of the Sub-Broker

6. Rights and Obligations of Principal Broker: Principal Broker's responsibilities, oversight duties, and support commitments

7. Commission and Payment Terms: Fee structure, commission splits, payment schedules, and calculation methods

8. Compliance Requirements: Regulatory compliance obligations, including SECP regulations and AML requirements

9. Confidentiality: Confidentiality obligations and handling of client information

10. Term and Termination: Duration of agreement, renewal terms, and termination conditions

11. Indemnification: Mutual indemnification provisions and liability allocation

12. Dispute Resolution: Process for resolving disputes, including jurisdiction and governing law

13. General Provisions: Standard legal provisions including notices, amendments, and severability

What sections are optional to include in a Sub Broker Agreement?

1. Non-Compete: Restrictions on competitive activities, used when the broker wants to prevent the sub-broker from working with competitors

2. Training Requirements: Specific training obligations, included when the broker provides formal training programs

3. Insurance Requirements: Detailed insurance obligations, used when specific insurance coverage is required beyond regulatory minimums

4. Digital Trading Platforms: Terms for using electronic trading systems, included when online trading facilities are provided

5. Marketing and Branding: Guidelines for using the broker's brand, included when the sub-broker is authorized to use the broker's marketing materials

6. Performance Targets: Specific performance metrics and incentives, used when implementing performance-based compensation

7. Additional Services: Terms for extra services beyond basic sub-broking, included when offering research, advisory, or other services

What schedules should be included in a Sub Broker Agreement?

1. Schedule A - Commission Structure: Detailed breakdown of commission rates, calculation methods, and payment terms

2. Schedule B - Compliance Procedures: Specific compliance protocols and procedures to be followed by the Sub-Broker

3. Schedule C - Required Documentation: List of regulatory and operational documents to be maintained

4. Schedule D - Reporting Requirements: Ƶ and timelines for required reports and notifications

5. Appendix 1 - KYC Requirements: Detailed Know Your Customer procedures and documentation requirements

6. Appendix 2 - Risk Management Protocols: Specific risk management procedures and limits

7. Appendix 3 - Technology Systems: Technical specifications and procedures for using trading platforms and systems

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Pakistan

Publisher

Ƶ

Document Type

Broker Agreement

Cost

Free to use

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