PAKISTAN: A BROKERAGE HOUSES SCENARIO

06/08/2021

Top 5 Brokerage houses in Pakistan

One of the countries along the Indus River has always been partition news, sharing its border with developing economies like India and China, Pakistan. The country faced ups and downs. From IMF declaring KSI (Karachi Stock Index) as the world's best index to political instability causing the economic decline. With the semi-industrialized economy of Pakistan's government and measures to liberalize foreign investment, Pakistan's financial market found its way back to progress and grew and created a robust and steady economy.

Pakistan Financial Market

The two central bodies controlling Pakistan's financial market are Pakistan's State Bank (Central Bank) and Pakistan's Securities and Exchange Commission (SECP). While the Central Bank regulates the banking, SECP is responsible for the rest of the market, including stocks, commodities, forex, etc.

Pakistan's top 5 brokerage houses are Instaforex, Hotforex, Avatrade, Fxpro, XM. Instaforex is Pakistan's best broker because this broker is one of the largest Asian brokers and very often has exciting promotions for traders (live and demo competitions, free car competition, $1000 start-up bonus, etc.). Next is Hotforex due to excellent support, a large number of customers, fast deposit, and withdrawal.

Pakistan Stock Market

On 11 January 2016, Pakistan Stock Exchange (PSX) was declared by merging Pakistan's three major stock exchanges, Karachi Stock Exchange (KSE), Lahore Stock Exchange and Islamabad Stock Exchange (ISE).

Before PSX, Karachi was Pakistan's largest stock exchange. As one of South Asia's oldest stock exchanges, KSE was declared one of the world's top 10 stock exchanges. In 2020, PSX announced the best performing stock exchange in Asia and the world's fourth place. This was possible due to Pakistan Stock Exchange's stock index, KSE 100, which enabled investment returns equal to 38.4 percent in dollars, inviting more foreign investment to steady market growth.

The KSE 100 works as a benchmark that analyses and tracks the performance of the PSX listed companies by creating a chart of their stock price index. It focuses on all businesses from different parts of Pakistan's economy.

Pakistan's stock exchange has foreign, local, and institutional investors with over 400 brokerage homes. Traders can search Pakistan's top brokerage houses and select the broker aligned with their trading plan.

Forex Trading in Pakistan

Unlike cryptocurrency, Pakistan's residents' Forex trading is legal. However, the Pakistan Stock Exchange stated that SECP must regulate brokers (Securities and Exchange Commission of Pakistan). Many local brokers don't follow this rule. Domestic brokers have many cases of fraud and misconduct. So, most traders either seek regulated domestic brokers or go for international forex brokerage firms to enter Pakistan's forex market. Trading in Pakistan is legal for foreign brokers.

The regulatory body states that Forex traders are not tax-free. They can either file income tax returns (if they are country residents) or give the government some percentage. Though forex trading in Pakistan's initial stages, forex traders were exempt from income tax, making it completely tax-free. The government later introduced this law to prevent the country's unnecessary capital outflow.

Commodity Trading in Pakistan

Pakistan Mercantile Exchange centralizes and regulates commodity trading in Pakistan. It is the only company that provides Pakistan's future commodity trading platform. In addition, the Exchange offers a technologically advanced commodity trading web platform under Pakistan's Securities and Exchange Commission.

When the Exchange began in 2007, it only had gold as a listed commodity. However, trade grew in more years, and now Pakistan's Mercantile Exchange trades in crude oil, gold, and silver as its primary commodities.

The best trading platform in Pakistan

MetaTrader is Pakistan's best trading platform, as most brokers use this platform, free indicators, high stability, easy installation, and user-friendly navigation. MetaTrader is a multi-asset trading platform enabling traders to trade forex, CFDs, commodities, crypto, ETF, stocks, and indices.

Conclusion

Pakistan's financial market offers traders a lot. One of Asia's oldest exchanges is a sense of steadiness. But no matter how intense the market is, there is always a risk that a trader and broker must look for dynamic market forces. As a top-ranked entity on the list of world stock exchanges and liberalized laws for foreign investors, it has attracted several foreign traders providing opportunities for growth and favorable returns on investment.

However, as all local brokers are not regulated under Pakistan's Securities and Exchange Commission, there is always a risk of trader capital misuse. Therefore, the trader must ensure the broker he/she chooses is regulated.