To install and use Online trading fascility, you must be aware of its' risks.

You may click following links to read and understand the online trading guidelins, terms and conditions.
Risks Disclosed to the Clients 

We had informed our clients about the potential risks of trading online and inherent risks of 
trading in an extreme market environment. 

Risk Disclosure: 

. When trading online, you should be aware that during periods of high internet traffic, you 
might experience delays in accessing account data due to systems’ capacity limitations. 
. Additionally, system response times may be adversely affected by increased market 
volatile conditions, quote delays, system performance and other factors outside the control 
of Millennium Brokerage (PVT.) Ltd. or any of its sister companies or their trading 
software e.g. Trade Cast, and or which may include your computer system and internet 
service provider. 
. You may also experience system outages or delays as a result of among other things such 
as power failures, programming failures or heavy trading volumes. 
. During periods of extreme volatility, you might suffer market losses in the price and share 
value of a particular stock when system problems result in an inability to place buy and 
sell orders. 
. The risk of financial loss in trading online can be substantial: therefore, you should consider 
whether such trading is suitable for you in light of your circumstances and financial 
resources. 
. During extreme market conditions, you might experience delays in order executions. 

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Internet Trading Regulations Of the Karachi Stock Exchange (Guarantee) Limited 

PREAMBLE: 

WHEREAS the Karachi Stock Exchange (Guarantee) Limited has decided to introduce a 
regulatory framework for Internet based trading which includes but is not limited to system 
processes, operations, information security, confidentiality, availability, integrity of the 
information systems and infrastructure and personnel involved. Internet based trading shall 
take place through order routing systems, which will route client orders for execution of 
trades to Karachi Automated Trading System (“KATS”) based on regular order matching 
principles. 

NOW, THEREFORE, the Board of Directors of the Karachi Stock Exchange (Guarantee) 
Limited, as directed by Securities & Exchange Commission of Pakistan under sub-section (4) 
of Section 34 of the Securities & Exchange Ordinance, 1969 (XVII of 1969) and approved by 
the Securities and Exchange Commission of Pakistan, hereby makes these regulations 
which shall come into force with effect from the date of publication in the Official Gazette. 

1. SHORT TITLE AND APPLICABILITY: 

a. These regulations shall be called " Internet Trading Regulations” of the Karachi 
Stock Exchange (Guarantee) Limited. 

b. These Regulations shall apply to all the Members, their Authorized 
Representatives and the facilities or services established by the Members for 
providing Internet Based Trading Services in the securities listed on the Karachi 
Stock Exchange (Guarantee) Limited. 

c. These Regulations shall come into force on publication in the Official Gazette of 
Pakistan. 

d. Members already engaged in providing Internet Based Trading Services, shall 
evidence their compliance with all requirements of these regulations to the 
Karachi Stock Exchange (Guarantee) Limited within six months from the date of 
gazette notification of these Regulations. 

2. DEFINITIONS: 

In these Regulations the following expressions shall, unless the context requires 
otherwise, have the meanings specified herein below: 

a. “Board” means the Board of Directors of the Exchange; 

b. “Broker” means any Member of the Exchange engaged in the business of 
executing transactions in securities for the account of others and for his own 
account and is registered with the Commission under the Brokers and Agents 
Registration Rules, 2001; 

c. “Commission” means the Securities and Exchange Commission of Pakistan; 

d. “Configuration Management” means a process in which the service provider has 
to undertake a change or add new functionality to the system or the 
infrastructure; 

e. “Exchange” means the Karachi Stock Exchange (Guarantee) Limited; 

f. “Internet Based Trading Services” means services associated with internet based 
trading for the purpose of routing orders to KATS through an automated order 
routing system as provided for under these regulations; 

g. “KATS or Karachi Automated Trading System” means the securities automated 
trading system introduced by the Exchange; 

h. “Member” means a Member of the Exchange; and 

i. “Operational Capacity” means the number of clients supported by the solution 
and infrastructure, usually assessed by the number of parallel requests served 
per seconds. 

3. HOURS OF OPERATION: 

The Hours of Operation for Internet Trading through KATS shall be notified from time 
to time by the Exchange with the approval of the Board. 

4. ELIGIBILITY: 

 A Member of the Exchange who is a Broker and fulfills the following minimum 
conditions may apply for providing Internet Based Trading Services (IBTS): 

a. have minimum net worth of Rs. 25 million as per the latest audited financial 
statements; 

b. have adequate infrastructure including functional website, internal control 
procedures and technological and human resources to facilitate the operations of 
IBTS in an effective and efficient manner on an ongoing basis; 

c. have well-defined procedures for allowing clients’ access to IBTS which shall 
inter-alia cover the following aspects: 

. Agreement with the Broker; 
. Assigning of trading limits; 
. Placement and execution of clients’ orders; 
. Mode and timing of reporting of trade confirmation to the clients; 
. Margin requirement (Initial, maintenance and other applicable margins) and 
margin calls; 

The above procedures should be in writing and made available on the Member’s 
website for easy access by the clients. 

5. PROCEDURE FOR THE COMMENCEMENT OF INTERNET BASED TRADING 
SERVICES: 

a. The Broker desirous of providing IBTS may submit an application to the 
Exchange to provide IBTS in the format as may be prescribed by the Exchange 
from time to time for seeking formal permission. The Broker shall also provide 
further information or documents as and when required for disposal of the 
application. 

b. The Broker shall undertake all the certification procedures as specified by the 
Exchange from time to time. A completion certificate shall also be submitted to 
the Exchange prior to the commencement of IBTS which may be scrutinized by 
the Exchange as and when deemed appropriate in accordance with its 
procedures. 

c. Upon completion of the certification requirement by a Member who also fulfills the 
above eligibility conditions, the Exchange shall, in writing either grant approval or 
reject the application as the case may be, within 30 calendar days of the date of 
submission of the application to the Exchange. 

d. The Broker may after obtaining permission for installation and maintenance of the 
system for IBTS, deposit the requisite fees with the Exchange. The Exchange 
shall decide the amount of the installation and maintenance fees from time to 
time. 

e. The Exchange shall display the list of Brokers eligible for providing IBTS on its 
website and update the same upon any addition and/or deletion therein. 

6. BROKER CLIENT SERVICE ARRANGEMENT: 

a. The Broker shall have an agreement with the client to whom it offers IBTS, which 
would contain appropriate disclosures highlighting the risks associated with 
internet trading. 

b. The Broker shall have appropriate arrangements in place to assess a client’s 
suitability to undertake internet based trading and have sufficient and verifiable 
information of each client for risk evaluation purposes. 

 

c. The Broker providing IBTS shall provide access to the clients on all the applicable 
rules, regulations, guidelines of the Exchange and Commission, information 
regarding the rights and obligations of the investors and the Broker; investor’s 
guides issued by the Exchange and the Commission, relevant legal provisions for 
investor protection and the complaint handling and arbitration procedures. 

 

 In addition to the above, the Broker shall also disclose to clients the information 
relating to UIS Services of NCCPL and SMS, IVR and Investor Account services 
of CDC. 

 

d. The Broker shall disclose to its clients availing IBTS the Service Level 
Agreements and the infrastructure provided by the third-party vendor, if any. 

 

e. The Broker shall keep in record for the period of at-least five years all IBTS 
information relating to client orders and communications with the clients along 
with proper security measures to prevent such record from any potential misuse. 

 

7. SERVICE REQUIREMENT: 

 The Broker providing IBTS shall ensure that: 

 

a. Satisfactory arrangements are in place so that it can at all times uniquely identify 
each and every order during the different stages of processing. 

 

b. Orders placed through its systems are fairly allocated in accordance with the 
rules/regulations/procedures of the Exchange. 

 

c. Effective audit trail is maintained to address risks arising from: 

 

i. the opening, modification or closing of a client account; 

ii. any transaction with significant financial consequences; 

iii. any authorization granted to a client to exceed a limit; 

iv. any granting, modification or revocation of systems access rights or 
privileges. 

 

d. Adequate risk management systems are in place for controlling product-wise 
trading limits and exposure of clients availing IBTS. The system shall be capable 
of monitoring trading activities of such clients in leverage and derivative products 
offered through IBTS. 

 

e. Internet trading system is capable of assessing the risk of the client on real-time 
basis at order entry level. The client shall be informed of acceptance/rejection of 
the order instantaneously. In case an order is rejected due to the system based 
controls because of client having exceeded limits etc., the system may allow a 
review and release facility for enabling the order to pass through. 

 

f. Provision of user manual of IBTS containing complete system and interfaces 
documentation on its website. 

 

g. System based reports on margin requirements, payment and delivery obligations 
etc. are disseminated to the client in a timely manner. 

 


h. Any error or omission in the system shall not indemnify the Broker from the 
responsibility of settling any trade. 

 

8. INFORMATION AND INFRASTRUCTURAL SECURITY MEASURES: 

 The Broker providing IBTS shall ensure that: 

 

a. The internet trading system is in compliance with the information security policy of 
the Exchange and the service provider/broker. 

 

b. The encryption technology applies for all client orders entered into the system 
and for all other confidential information the system is capable to uniquely identify 
each client of the Broker. For this purpose, appropriate technical and 
administrative controls are also implemented to protect the clients against identity 
theft and related compromises. 

 

c. Firewalls are in place to prevent intrusions by unauthorized persons. The firewall 
policy shall be adequately defined, maintained and reviewed periodically. 

 

d. The system is configurable to allow auto-logoff in case of inactivity of the trading 
terminal and/or the trading website. 

 

e. Implementation of first and second level passwords and PIN requirement at order 
placement level are implemented. 

 

f. Functionality of automatic expiry of passwords at the end of a reasonable 
duration and re-initialization of access on entering fresh passwords are 
implemented. 

 

g. All transaction logs with proper audit facilities are maintained in the system. 

 

h. Appropriate technical controls are in place against: 

 

i. Presentation of incorrect data, intentionally or malevolently; 

ii. False presentation or the use of incomplete information for transactions; 

iii. Manipulation of any data; 

iv. Viruses/Malware, leading to any loss of data, unauthorized access to data, or 
threat of unavailability of systems; 

v. Cyber extortion (distributed denial of services/distributed agent-based 
attacks). 

 

9. OPERATIONAL CAPACITY: 

a. The Broker providing IBTS shall ensure that its Operational Capacity is evaluated 
regularly and that it maintains the log of evidences of such activities which shall 
include but not be limited to the following: 

 

i. Details of the procedures for undertaking such an evaluation; 

ii. The time at which such evaluation is undertaken; 

iii. A copy of the results of such evaluation. 

 

b. The Broker providing IBTS shall continuously update and enhance the 
Operational Capacity in line with the increasing quantum of trades being 
generated through IBTS. 

 

10. SERVICE AVAILABILITY AND BUSINESS CONTINUITY: 

 The Broker providing IBTS shall ensure that: 

 

a. Availability of the service in the following events: 

 

i. Website is not accessible thereby barring from trading, receiving or providing 
information; 


ii. Particular section(s) of the website are not accessible due to either denial of 
service or lack of capacity or inability of the service providers to provide timely 
access to website; 

 

b. Satisfactory alternative arrangements and contingency plans are in place to make 
sure that IBTS can continue in the event of a large-scale disruption (Disaster 
Recovery Planning/Business Continuity Planning). 

 

c. Appropriate arrangements are in place where disruption of service is witnessed 
on the part of vendor. 

 

d. Information regarding any disruption in the online trading services either on part 
of the Broker or the third-party vendor, is immediately disclosed on its website 
and to its clients. 

 

11. SYSTEMS MODIFICATION: 

 The Broker providing IBTS shall submit to the Exchange and disclose on its website, 
in advance or promptly as the case may be, the information relating to any significant 
changes (Major Release) to its systems and the reasons for the change, availability 
or revocation of any specification/facility, delay in placement of orders/ execution of 
trades etc. The changes in the system must comply with the Configuration 
Management policy of the service provider/Broker. 

 

12. MONTHLY REPORTING: 

 The Broker providing IBTS shall maintain monthly reports on the reliability and 
compliance status of the service. The report shall inter-alia include: 

 

a. Number of users of the system as at the end of the month; 

 

b. Daily average number of transactions (of all types) processed by the system 
during the month and the highest number of transactions processed by the 
system on a single day during the month; 

 

c. Percentage of the scheduled time for availability for which the service was not 
available; 

 

d. Number of incidences in which the system remained partially or fully inaccessible 
for trading 

 

e. Reason for non-availability, if any; and 

 

f. System modifications, if any, and its impact on the existing services. 

 

13. PERIODIC AUDIT, VULNERABILITY ASSESSMENT AND PENETRATION 
TESTING: 

a. The Broker shall ensure that its IBTS systems, controls and procedures are 
audited and penetration tested independently, once in every two years, by an 
audit firm approved by the Exchange. 

 

b. The Broker shall submit report of the auditor to the Exchange within two months 
of the date of the close of its periodic vulnerability assessment, if not assessed by 
the Exchange itself. 

 

14. GENERAL DISCLOSURES: 

a. The Broker providing IBTS shall ensure that its website contains following 
information in plain English and Urdu language and in an easily accessible form: 

 

i. A basic explanation of securities trading; including definitions of common 
terms used on the trading screen; 


ii. A general statement and information regarding the manner in which orders 
are accepted, processed, settled and cleared via the internet; 

iii. Disclosure of various risks of securities trading, including the risk of systems 
outages and failures and any alternative means of placing orders; 

iv. Procedures to cancel pending orders during a system failure; 

v. Rules and regulations affecting inter alia client broker relationship, arbitration 
procedures and any other useful information from the perspective of investor 
protection; 

vi. Hyperlink to the websites/page on the websites of the Exchange and the 
Commission displaying relevant rules, regulations, guidelines of the 
Exchange and Commission, information regarding the rights and obligations 
of the investors and the Broker; investor’s guidelines issued by the Exchange 
and the Commission, relevant legal provisions for investor protection and the 
complaint handling and arbitration procedures etc. 

vii. Hyperlink to the websites/page on the websites showing information relating 
to UIS Services of NCCPL and SMS, IVR and Investor Account services of 
CDC. 

 

b. The Broker providing IBTS shall ensure that the ticker/quote/order book displayed 
on its website displays the time stamp as well as the source of information 
against any given information. 

 

c. The Exchange shall have system available to ensure on real time basis that all 
the information as prescribed under these regulations are properly disclosed and 
updated from time to time by the Broker on its website. 

 

15. CROSS TRADES: 

 The Broker shall ensure that the IBTS systems for routing client orders shall not be 
allowed to cross trades of their clients with each other. All orders must be offered to 
the market for matching. 

 

16. SUSPENSION AND CANCELLATION OF INTERNET TRADING CERTIFICATE: 

a. The Exchange shall assess the effectiveness of systems and processes of the 
Broker providing IBTS in accordance with the procedures devised from time to 
time and approved by the Board. 

 

b. The Exchange may suspend the Internet Trading Certificate of a Broker if it 
violates any of the regulations, and such suspension shall continue until and 
unless the Broker complies with the regulations it has violated or removes the 
cause of suspension in the manner as prescribed by the Exchange. 

 

c. The Broker may appeal to the Exchange for the revival of the Internet Trading 
Certificate. 

 

17. DISPUTE RESOLUTION: 

 In case of any dispute arising in relation to IBTS between Brokers and between 
Broker and client which is not otherwise settled amicably, the matter will be resolved 
in accordance with the arbitration and dispute resolution procedures of the Exchange. 

 

18. INFORMATION ACCESSIBILITY: 

 To assist the Exchange or Commission in investigating instances of suspected or 
potential abuses such as insider trading and market manipulation, the Broker 
providing IBTS shall provide full and prompt responses to all requests for information 
by the Exchange or the Commission as the case may be.
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