Guardians can open and fully manage trading accounts for minors, handling all instructions and activities
The Pakistan Stock Exchange, in collaboration with the National Clearing Company of Pakistan Limited and the Central Depository Company, has announced comprehensive guidelines for opening trading accounts for minors.
According to the guidelines, a guardian can open a trading account on behalf of a minor and the operating authority of the account will rest solely with the guardian, who will handle all trading instructions and related activities.
Developed in consultation with the Securities and Exchange Commission of Pakistan (SECP), the initiative aims to promote financial inclusion and encourage the investment habits of the younger generation.
According to the statement issued by the chief regulatory officer of PSX, the guidelines set out the procedure and conditions for opening and operating trading accounts of minors through their natural or legally appointed guardians. The new framework, entitled “Guidelines for Opening Trading Accounts of Minors”, was introduced to unify and simplify procedures, enabling minors to access financial services in a regulated and secure manner.
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Under the new rules, a guardian can open a trading account on behalf of a minor by producing valid identification documents issued by the National Database and Registration Authority (NADRA) such as Minor Card, Form-B or Child Registration Certificate.
If the guardian is someone other than the father, a court-issued Certificate of Guardianship will be required. Each account will be titled to reflect the relationship between the minor and the guardian. The authority to operate the account shall rest solely with the custodian, who shall handle all trading instructions and related activities.
The guidelines further specify that collections and payments may be made through the minor’s bank account opened under the guardian, a joint account with the guardian, or the guardian’s personal bank account.
To safeguard the interests of minors, trading in futures markets, leveraged products, negotiated agreements and square trading on the same day will not be permitted. Stock brokers are required to act strictly in accordance with these operating conditions.
When a minor reaches the age of 18, the system will automatically notify both the broker and the guardian one month in advance. Once majority is reached, the minor’s account will be temporarily suspended until a new trading account is opened in the person’s name.
All securities from the minor’s sub-account will then be transferred to the new account without any capital gains tax implications, retaining the original acquisition cost and date.
Prior to the age of 18, securities held in the minor’s account will be treated as part of the guardian’s portfolio. Once the new account is created, the stock will be transferred to the individual’s name on a First-in-First-Out basis, similar to existing gift transfer procedures.
PSX has instructed all stockbrokers to ensure strict compliance with these guidelines and related operational requirements.
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