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Guidelines for Opening Trading Accounts of Minors in Pakistan

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To promote a culture of savings and investment and to enhance financial inclusion in Pakistan’s capital markets, regulators have introduced consolidated Guidelines for Opening and Operating Trading Accounts of Minors. These guidelines enable minors to access capital market services under the supervision of a lawful guardian, while ensuring compliance with regulatory, AML/CFT, and tax requirements.

Purpose

The primary objective of these guidelines is to facilitate smooth, transparent, and secure opening of Minor Investor Accounts, allowing minors to begin their investment journey at an early age through a regulated framework.

Process for Opening a Minor Trading Account

1. Preliminary Requirements

A guardian may approach a licensed securities broker to open a trading account for a minor by providing:

  • Any one of the following NADRA-issued documents for the minor:
    • Juvenile Card
    • Form-B
    • Child Registration Certificate (CRC)
  • Guardianship Certificate issued by a Court, if the guardian is someone other than the father.
  • Full compliance with AML/CFT requirements, which shall be conducted through the guardian, including:
    • Identity verification
    • Screening
    • Risk profiling
    • Source of funds verification

2. Account Title for Minor Trading Account

  • A sub-account shall be opened in the name of the minor through the guardian.
  • The prescribed account title format is:

“ (Minor) through  (Guardian)”

  • Securities brokers must ensure appropriate marking in the UIN registration and UKN process to clearly identify the account as a minor’s account.

3. UIN Registration with NCCPL

  • The UIN/UKN of the guardian shall be registered with NCCPL for settlement and CGT computation purposes.
  • NCCPL will introduce functionality in NCSS and KIS systems to record minor details; however:
    • This will only be for identification and marking purposes.
    • The guardian’s UIN will remain the primary reference for all settlements and tax calculations.

4. Account Operation and Custody

  • The guardian has full authority to operate the minor’s trading account.
  • Securities brokers must act solely on the instructions of the guardian.
  • All trading, custody, and allied activities in CDC shall be governed through the guardian.

5. Mode of Receipts and Payments

Receipts and payments related to the minor’s account may be made through any one of the following approved modes:

  • Minor’s own bank account (opened through guardian)
  • Minor’s bank account jointly held with guardian
  • Guardian’s personal bank account

The securities broker must strictly accept and make payments only through the agreed mode.

6. Trading and Investment Restrictions

To safeguard the interests of minors, the following activities are not permitted in a Minor Trading Account:

  • Trading in futures markets (including DFC, CSF, and options)
  • Use of leveraged products such as:
    • Margin Trading System (MTS)
    • Margin Financing System (MFS)
    • Securities Lending & Borrowing (SLB)
  • Trading in the Negotiated Deals Market
  • Same-day square-up transactions

7. When a Minor Attains the Age of Majority (18 Years)

Brokers and NCCPL are required to monitor the minor’s age through back-office systems and CNIC records.

Key steps include:

  • Auto-generated alerts to the broker and guardian one month before the minor turns 18.
  • If the account is not converted upon attaining majority:
    • The account shall be temporarily suspended.
    • No fresh exposure or securities transfer shall be allowed.
    • Only liquidation of existing securities in CDC will be permitted.
  • A new regular trading account shall be opened in the sole name of the account holder using CRF or Sahulat Account procedures.
  • The existing minor account shall be closed.
  • Complete transfer of securities from the minor’s CDS sub-account to the new account shall be executed.

8. Tax Impact on Transfer of Inventory

  • Tax treatment shall be governed by applicable tax laws.
  • Until the minor attains maturity, the inventory held in the minor’s CDS sub-account shall be considered as inventory of the guardian.
  • Upon attaining majority and opening a new trading account:
    • Securities will be transferred to the new CDS sub-account.
    • Cost and date of acquisition will remain unchanged.
    • No Capital Gains Tax (CGT) will be triggered at the time of transfer.
  • The transfer shall follow the First-in-First-Out (FIFO) principle while adjusting the guardian’s inventory, similar to transfers made through gifts.

Conclusion

The Minor Trading Account framework provides a regulated and secure pathway for minors to participate in Pakistan’s capital markets under guardian supervision. By clearly defining documentation, operational authority, trading restrictions, and tax treatment, these guidelines strike a balance between financial inclusion and investor protection, paving the way for long-term investment discipline from an early age.

For further guidance, investors are advised to consult their securities broker or refer to PSX and NCCPL regulations.

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