Opening a Trading Account

Choose the broker you want to trade with and enter into a broker-client agreement. You should carefully read the various terms and conditions and understand their implications before entering into an agreement with a member/broker. This agreement is mandatory and is in the form of account opening form. The features of this agreement which reduce the chances of any dispute are terms and conditions which relate to order or trade confirmation, brokerage charged by a broker and delivery of securities and funds.

What precautions are to be taken in signing a broker-client agreement?

n Standardized account opening form is used.
n Check whether the name of both parties have been mentioned in the agreement
n Check whether both the parties and their representatives have signed on all the pages of the agreement. Also check that the witness of both the parties have signed and put their names against their signature.
n Check whether the Trading member's representative have the authority to sign the agreement.

How do I execute an order on the ISE?

Once the trading account is opened with a broker and initial deposit is made, the investor may place his sale/purchase orders. An order may be verbal or in writing. Once the order is executed, the shares/amount is to be settled on given settlement date.

Does the UTS give lower priority to small orders as against big orders?

In fact you will be surprised to know that the UTS (Ultra Trading System) treat all quantities alike. For example if you have placed a buy order for 5000 shares of company `A' @ Rs. 20/- per share ahead of another investor who has placed buy order for 10,000 shares of company `A' @ Rs. 19/- then your order will get priority over the big order.

How does one ascertain the correct rate at which transactions have taken place?

Brokers are obligated to give their clients a trade confirmation slip the moment a trade takes place. This slip carries the rate at which the trade takes place. At the end of the day the broker has to issue a computer generated statement which separately shows the rate at which the trades take place along with the brokerage rate/ commission rate.

It will be the responsibility of the investor to collect the purchase/sale confirmation contract from the broker's office within 2 working days of the date of execution and account ledger report within 2 working days.

How do I know my broker is giving me the best price?

The UTS matches orders in such a way that the order is executed at the best possible price available on the system. This is because the process of matching buy and sell order is done by the system.

What should I do in case of any grievance?
The ISE has a Department of Investor Relation. The investors may call in case they need any clarification. In case of any grievance, a complaint may be filed with the ISE against the concerned broker. If a dispute is not resolved amicably, there is a procedure for arbitration to decide the matter.

What are the documents you should receive from your broker and when?

An investor must obtain an order confirmation slip or account statement reflecting the execution of order from the concerned broker soon after the execution. Any discrepancy should be reported to the broker accordingly.

What are the points to be checked by an investor to check the validity of documents?

The document contains the name and address of trading member, their ISE registration number and signature of authorized signatory(s).

What is financing and how it is different from normal stock exchange transaction/trade and whether it is legal under stock exchange regulations?

Financing is referred to as a transaction whereby an investor invests money with the broker for a periodic fixed return.It is different from the normal stock exchange transaction/trade on two counts:

1. The money is not given for investment in shares.

2. It guarantees fixed return (where as the exchange transactions does not guarantee any such fixed return).

Financing is not allowed under the regulations of the Islamabad Stock Exchange. Investors are therefore cautioned not to enter into transaction involving financing.