Forex Trading in Pakistan

How popular is Forex Trading in Pakistan?

Forex trading in Pakistan has increased recently. The reason behind the increasing popularity of forex trading in Pakistan is that many brokerage firms have started providing its services as the market has continued to develop and has become more regulated.

Traders in Pakistan usually trade during the Japan trading session as it is the closest in terms of a time zone. Also called the Asian session, it opens around 23 GMT and lasts until 8 GMT. It is not as active as others, however, around 1/5 of all trading volume can be seen during this time.

Read more on Japan trading session on forexpeacearmy.com

Restrictions:

There are almost no restrictions on trading forex in Pakistan.

Brokers mostly accept deposits in USD and a person needs to be a tax filer to be accepted. This is due to the Finance Bill 2018 that was passed in order to limit tax evasion, money laundering, and capital flight potential. It requires foreign currency account holders to prove that they have been regular tax filers.

Additionally, trading cryptocurrencies have been declared illegal by the State Bank of Pakistan (SBP) in 2018 as part of the same initiative.

This in return, has made forex trading in Pakistan more transparent and regulated.

Regulations:

The main regulatory authority for forex in Pakistan is the Securities and Exchange Commission of Pakistan (SECP). It was established in 1999 and is headquartered in Islamabad Pakistan.

The main regulations that SECP imposes on forex trading are in the form of broker regulations under the Securities Act, 2015. However, new rules for brokers are currently developed and could potentially make changes to the market. This would differentiate between 3 types of brokers:

Trading and clearing broker (T&C)
Trading and self-clearing (TSC)
Trading only (TO).

This is done in order to give an opportunity for smaller brokers to meet all the required compliance and regulatory frameworks, therefore encouraging foreign brokers to register under SECP.

Despite the regulations, international brokers can still work in Pakistan. This is the biggest reason for creating an uncertain market for forex traders. Therefore, It is highly recommended to choose a forex broker with years of experience in the forex industry and regulation not only in Pakistan but also in other jurisdictions such as Switzerland, UK or Australia that are considered to be safe.

To know more about SECP updates, visit their official website.

Tax Liabilities in Pakistan:

Initially, when forex trading was introduced in Pakistan, there were no rules for tax deductions and it was considered to be tax-free. But new rules have been devised by the Federal Bureau of Revenue (FBR) for tax deductions on all trades in Pakistan. FBR divides taxation into two categories.

For Filers:

A person who is filer and pays his annual taxes is liable to fewer tax deductions. The maximum tax based on profit is 15%.

For Non-Filers:

A non-filer can be subjected to a maximum tax of 35% which is the capital gains tax rate as of now.

If you want to get complete tax details visit an overview by Deloitte or visit the Federal Board of Revenue (FBR) of Pakistan official website.

Best Forex Brokers in Pakistan

Many local forex brokers in Pakistan are not regulated by SECP. Therefore, choosing international forex brokers that have years of experience in the forex industry is highly advisable.

ThinkMarkets

It is a UK based forex brokerage firm established in 2010 and headquartered in the United Kingdom with regional offices in Australia and Bermuda.

It is regulated by:

Financial Conduct Authority (FCA) in the United Kingdom
Australian Security and Investment Commission (ASIC) in Australia.
Financial Sector Conduct Authority (FSCA) in South Africa.

Key details:

Minimum trade size of 0.01.
Maximum Leverage of 500:1
1-dollar minimum deposit requirement.
More than 35 currency pairs.
More than 5 Cryptocurrencies
More than 1200 CFD`s in Gold, Silver, Other Precious Metals, Stocks, Stock Indexes, Bonds, Oil, Other Commodities.
MT4, MT5, Trade Interceptor trading platforms.
Mobile and web applications are available.
It has multiple deposit options including Bank Wire, VISA, MasterCard, PayPal
Withdrawal Methods of Bank Wire, VISA, MasterCard, Neteller, SkrillRatings:

Rating:

At the time this article is written, ThinkMarkets.com is rated 3.4 out of 5 based on 100+ traders reviews.

Please click here to read and contribute reviews for ThinkMarkets.com

SwissQuote

SwissQuote owns regional offices in Hong Kong, China, Singapore, Malta, United Arab Emirates, and the United Kingdom. It was established in 1996 and has a good reputation in the forex industry.

SwissQuote is regulated by:

Hong Kong Securities and Future Commission (HKSFC) in Hong Kong.
Financial Conduct Authority (FCA) of the United Kingdom.
Malta Financial Services Authority (MFSA) in Malta.
Monetary Authority of Singapore (MAS) in Singapore.
Financial Market Supervisory Authority (FMSA) in Switzerland.
Dubai Financial Services Authority (DFSA) in UAE.

Key details:

A minimum deposit of 1000 USD
More than 90 currency pairs.
More than 10 Cryptocurrencies
Deposit options including Bank Transfer, Maestro, and Visa.
24/7 customer support
It supports MT4 and MT5 trading platforms.
Both web and mobile applications are available.

Rating:

At the time this article is written, SwissQuote.ch is rated 2.6 out of 5 based on 10+ traders reviews.

Please click here to read and contribute reviews for SwissQuote.ch

XM.com

XM Is headquartered in Cyprus and has regional offices in Australia and Belize.

XM.com is regulated by:

Australian Security and Investment Commission (ASIC) in Australia.
Cyprus Securities and Exchange Commission (CySEC) in Cyprus
International Financial Services Commission (IFSC) in Belize

Key details:

A minimum deposit of 5 USD.
Minimum trade size of 0.01
Maximum leverage of 888:1
More than 55 currency pairs.
More than 5 Cryptocurrency pairs.
Deposit and withdrawal options including Bank Wire, VISA, MasterCard, Neteller, Skrill
It supports MT4 and MT5 trading platforms.
Both web application and applications are available.

Rating:

At the time this article is written, XM.com is rated 3.1 out of 5 based on 500+ traders reviews.

Please click here to read and contribute reviews for XM.com

Key Takeaways:

The Securities and Exchange Commission of Pakistan (SECP) is the main regulating body that oversees forex brokers.
Many local forex brokers in Pakistan are not regulated by SECP.
Choosing international forex brokers that are regulated in other jurisdictions is highly advisable.
Brokers mostly accept deposits in USD or other major foreign currencies from Pakistani clients.
Trading cryptocurrencies has been declared illegal by the State Bank of Pakistan (SBP) in 2018.
Tax can depend on whether you are a regular tax filer.

Author Profile

Fat Finger

Hello everyone!

My name is Phat Fin Ge, but most people just call me Fat Finger or Mr. Finger.

Many years ago, I was a trader on the Hong Kong Stock Exchange. I became so successful that my company moved me to their offices on Wall Street. The bull market was strong, but my trading gains always outperformed market averages, until that fateful day.

On October 28th, 1929, I tried to take some profits after Charles Whitney had propped up the prices of US Steel. I was trying to sell 10,000 shares, but my fat finger pressed an extra key twice. My sell order ended up being for 1,290,000 shares. Before I could tell anyone it was an error, everyone panicked and the whole market starting heading down. The next day was the biggest stock market crash ever. In early 1930, I was banned from trading for 85 years.

I went back to Hong Kong to work at my family's goldfish store. Please come and visit us at Phat Goldfish in Kowloon, only a 3 minute walk from the C2 MTR entrance.

I thought everyone would forget about me and planned to quietly return to trading in 2015. To my horror, any error in quantity or price which cause a problem kept getting blamed on Fat Finger, even when it was a mix up and not an extra key being pressed. For example, an error by a seller on the Tokyo Stock Exchange was to sell 610,000 shares at ¥6 instead of 6 shares at ¥610,000. That had nothing to do with me or with how fat the trader's finger was, but everyone kept yelling, "Fat Finger! Fat Finger!" In 2016, people blamed a fat finger for a 6% drop in the GBP. It really was a combination of many things, none to do with me or anyone else who had a wider than average finger.

Now that I can trade again, I'm finding forex more interesting than stocks. I've been doing some research on trading forex and other instruments and I'll be sharing it here.

If you see any typing errors, you can blame those on my fat finmgert. If you see any strange changes in price, it's not my fault.