Pakistan’s stock market is now viable for international and domestic investment. As of May of 2017, MSCI Global reclassified the major Pakistani stock indexes from Frontier Markets to Emerging Markets during the company’s May 2017 Semi-Annual Index Review. In addition, the country’s three major exchanges in the cities of Lahore, Karachi and Islamabad merged their operations in January of 2016 to become the Pakistan Stock Exchange Limited (PSX).
In order to invest and trade in stocks in Pakistan, you must first open an account with a reputable Pakistani broker. Keep in mind that not all brokerages are created equal, so make sure to carefully consider your needs before opening an account.
What You Need to Know Before You Start
The Pakistan Stock Exchange (PSX) and all other financial institutions, including stock brokers, are overseen by the Securities and Exchange Commission of Pakistan (SECP). In addition to the regulation of the corporate sector and capital markets in Pakistan, the agency regulates the insurance industry, credit rating agencies, stockbrokers, surveyors, non-banking financial companies and private pension schemes.
If you are a Pakistani national and live in Pakistan, you must have a funded Pakistani bank account and the proper national identification documents to confirm your identity to open a brokerage account. If you are not a Pakistani national and/or live outside of Pakistan and wish to invest in the Pakistan stock market, then you must comply with certain additional requirements.
Non-residents, including non-resident foreign nationals (NRFs) and non-resident Pakistani nationals (NRPs), can invest in Pakistan along with foreign institutional investors (FIIs) by meeting particular requirements. In order to trade stocks in Pakistan, all NRPs, NRFs and FIIs are required to open an account with a Pakistani bank offering custodial services.
A custodial bank account is actually made up of two accounts: a special convertible rupee account to hold cash at the bank and a linked securities account to hold the stocks you purchase. You will also need to open a depository account with the Central Depository Company and the State Bank of Pakistan to hold securities and government bonds.
Yet another account must be opened at a custodian bank for you to be issued a unique market identifier (UIN) number, which identifies you in the market. NRFs, NRPs and FIIs must open all these accounts at custodian banks before they can open an account with a Pakistani stockbroker, in addition to providing identification, bank information, etc.
Open a Brokerage Account
If you live in one of the major cities in Pakistan (Karachi, Lahore or Islamabad) you should have no problem locating an online stock broker in your area. If you have a bank account at a Pakistani bank, you can open a broker account online by providing the proper identification and proof of residence. You can also visit the broker in person and open an account at their office or branch.
For NRFs, NRPs and FIIs, once you have completed all the steps mentioned in the previous section, then you can open an account with a registered Pakistani stockbroker. If you have no interest in trading local stocks from Pakistan and instead would prefer to trade international markets, you can open an account with an international broker like Interactive Brokers that accepts clients from Pakistan.
What to Consider Before You Open an Account
Before opening an account from Pakistan to trade stocks online, several things should be taken into consideration. These items include:
Regulation and Exchange Membership
Brokers doing business on the PSX must hold a Trading Right Entitlement Certificate (TREC) issued by the PSX that authorizes the broker to execute trades on the exchange. Also, all financial companies including stockbrokers must be registered and regulated by the PSEC.
Any online broker needs to have an online trading platform so you can place orders on the PSX, PMEX or other exchanges. This trading software needs to be simple to access and use and most will provide news feeds and technical analysis tools like price charts and indicators.
Full-service brokers will provide access to market research and other information that traders and investors can find useful.
Commissions and Fees
If you plan to actively trade, you want a broker with low commissions and per trade fees, since they can really add up over time. Even infrequent traders will benefit from keeping costs down.
Good customer service will answer questions about your account and help you resolve issues. Most of the stockbrokers in Pakistan can be contacted via phone and email.
Our Picks for the Best Stock Brokers in Pakistan
Trading stocks in Pakistan can be a breeze with a competent stockbroker. Our picks below have oversight from the SECP and are members of the PSX and the Pakistan Mercantile Exchange Limited (PMEX).
Our last pick does not have Pakistani exchange membership or regulation by SECP, but it is included for Pakistani-based traders looking for an international broker to trade in other markets.
Best Overall: Interactive Brokers
Interactive Brokers is a U.S.-based international broker. Since Interactive Brokers does not maintain an office in Pakistan or a membership on its exchanges, its clients residing there cannot use the broker to trade local markets. Interactive Brokers was included here for Pakistani traders who wish to trade other markets around the world.
An Integrated Investment Account allows you to trade a variety of assets listed on upwards of 120 exchanges worldwide. You can get trade execution service in stocks, forex, ETFs, metals, options, futures, funds, structured products
Interactive Brokers’ trading platforms include its easy-to-operate client portal designed for newer traders as well as its advanced Trader Workstation (TWS) platform with numerous features experienced traders will appreciate. Interactive Brokers also provides a web platform called IBKR WebTrader.
Those who want to trade on the move can access their account with the IBKR mobile app for tablets and smartphones using either Android or iOS. Hands-free access is available using the IBot add-on that works with Client Portal, TWS and the IBKR mobile app.
Best Overall: Abbasi and Company (Pvt) Ltd.
Founded in 1999 and based in Lahore, Abbasi and Company is a full member of the PSX and a Universal Member of the PMEX. The broker specializes in providing retail stockbroking services and offers customized individual and corporate portfolios, as well as equity and commodity futures execution on the two Pakistani exchanges.
Commodities available to trade on the PMEX include gold, silver, copper, WTI and Brent crude oil, cotton and six currency pairs. Orders for equities and commodities can be given through recorded telephone lines, a printed order form at their office or via Abbasi’s proprietary online trading platform. Orders are then processed through two-day (T+2) and spot settlement systems that automatically match buy-and-sell orders.
The system takes both limit and market orders and matches bids and offers with the quantity demanded and that is available. You can get a downloadable desktop trading terminal and a mobile app for Android and iOS devices.
Customer service is available during business hours via telephone or email or through a form on its Contact Us page. You can also visit one of its two offices in Lahore. Abbasi’s research resources are listed on a page on its website, which includes PDFs for opening accounts, an investor guide in English and Urdu, products listings for the SBX and PMEX and many other account and market-related documents.
Best for Beginners: Shajar Capital
Shajar Capital was founded in 2010 and is licensed as a broker by the PSX. In addition to stock execution services, Shajar’s professionals give clients and investors portfolio management and advisory services. Shajar’s associated company, Invest One Markets (Private) Limited (IOML) is a member of the Financial Markets Association of Pakistan and offers a full range of financial services including investment banking and mergers and acquisitions.
Shajar provides clients with a web-based research portal from its team of professionals with recommendations to buy, sell or hold stocks based on the company’s fundamentals. The research team also updates information on stocks that customers hold or are interested in buying.
You can place trades directly on the exchange and keep track of your portfolio on Shajar’s web-based or desktop trading platforms. In addition, you can download a mobile app for Android or iOS devices. Customer service can be accessed during business hours via telephone, email, fax and through a form on its Contact Us page.
Best for Day Traders: IGI Securities
With offices in the three major cities in Pakistan as well as six other regional cities, IGI Securities was founded in 1994. Through its parent company, IGI Holdings Limited, the firm is a full member of the PSX and a corporate member of the PMEX. The broker has over 10,000 clients in 60 Pakistani cities and abroad.
In addition to stocks, IGI Securities gives clients access to trade commodities on the PMEX, including crude oil, gold, silver, cotton, rice, sugar, wheat, red chili, palm olein and the Karachi Interbank Offered Rate (KIBOR). You can also trade debt instruments through IGI’s Fixed Income Platform where you can trade market treasury bills, Pakistan government bonds, Ijarah Sukuks and term finance certificates.
With respect to research, IGI provides clients with daily articles on equities, economic data, strategies and a commodity outlook. Their research covers 30 companies listed on the KSE 100 and the leading commodities of the PMEX. The broker’s two trading platforms, the iTrade Terminal and the Eclipse Trading Terminal, can be downloaded from its website, while its mobile applications can be found on the Apple App Store and the Google Play Store.
IGI’s commissions are from 10 paisa for shares priced below 100 paisa, 15 paisa for shares priced from 100 to 249.99, 25 paisa for shares priced from 250 to 349.99 paisa and 0.1% of the value of a share for shares priced over 350 paisa. The low commissions make this broker our pick for best day trading broker.
Make Your First Trade
If you’ve decided on a top broker to open an account, you can start by filling out the required paperwork and providing identity documentation.
In the meantime, you can download the trading platform and get it set up on your computer, tablet and/or mobile device.
Once your account is open and you have identified a good stock or another asset to take a position in, just enter an order on your stock broker’s platform to get started.
Remember that not all brokers offer the same services or asset classes, so make sure you look through their offerings in detail to be sure they’re right for your needs.
Frequently Asked Questions
What is the best way for novice Pakistani investors to invest?
Investors can buy ADRs, ETFs, mutual funds or stocks using an online broker.
What are good online brokers for investing in Pakistan?
Good online brokers include Interactive Brokers, IGI Securities and Shajar Capital.
About Jay and Julie Hawk
During her financial career, Julie developed world-class expertise in technical analysis, including Elliott Wave Theory, and was deeply involved in initiating research into automated trading and trading signal systems. As a member of the San Francisco Writers’ Guild, Julie regularly wrote trade strategies, educational material, market commentary, foreign exchange newsletters, reports, articles and press releases. In addition, Julie was interviewed for various financial markets magazines and news wires in her professional capacity as a forex and derivatives expert. Since retiring from working at banks, Julie has been writing and editing books and articles about financial markets for companies like Benzinga, as well as trading forex online and mentoring other traders as part of TheFXperts’ financial team.
In addition to trading stock index, forex and commodity futures and options professionally on exchange floors, Jay also has experience trading stocks and options for private investors and trading forex online for his own account. He has also developed extensive experience in performing and using fundamental economic and corporate analysis to inform his trading and investment activities. Jay is also an expert financial writer with particular expertise in reviewing online brokers and investor services.