Rating Details	Rating Type	BFR
	Dissemination Date	Current (28-Apr-23 )	Previous (06-Jun-22)
	Action	Maintain	Initial
	Rating	BFR 2+	BFR 2+
	Outlook	Stable	Stable
	Rating Watch	-	-

Rating Rationale	Factor	Comment
	Ownership	Bank Alfalah Limited is the primary shareholder with ~62% of the ownership followed by CLSA Limited with ~25% of the stakes.
	Governance	The board is comprised of six members, out of which four members represent BAFL. Recently, Mr. Aliuddin Ansari resigned from the board. Additionally, the Company has appointed two new members.
	Management and Client Services	ACLSA has a well-developed organizational structure. The experienced management team provides sound client services.
	Internal Controls and Regulatory Compliance	Comprehensive policies are in place; the compliance department ensures implementation.
	Business Sustainability	A major part of revenue emanates from equity brokerage. A product and geographic concentration are present in the company's top line.
	Financial Sustainability	At end-Dec'22, the LCB stood at ~PKR 340mln depicting a significant growth compared to Dec'21.

Key Rating Drivers

Alfalah CLSA Securities (Pvt.) Limited ( ACLSA or the Company ) is primarily engaged in the provision of equity brokerage while the income from investment banking and research also aids the topline. The assigned rating incorporates the business acumen of the primary sponsors' Bank Alfalah Limited and CLSA. ACLSA enjoys a market share of ~4.8%. ACLSA has implemented stringent protocols for risk assessment along with comprehensive policies. The governance framework could be further improved by appointing independent directors to enhance oversight. ACLSA has outsourced its internal audit department which strengthens the internal control framework. The Company has a well-developed organizational structure with experienced management. ACLSA offers its customers online trading, research and all other basic facilities. The brokerage revenue of ACLSA increased by 31% in CY22 compared with CY21 despite market volumes declining by 51% during the same period. The market risk is negligible as the Company does not invest in equity securities. As a part of long-term strategic plans, ACLSA has already established a money market and forex department in CY22, which will aid the Company’s topline going forward, and the establishment of facilitation desks in multiple cities. The improvement of the technological platform by integrating with the Bank Alfalah app and geographical diversification is also under consideration. Association with CLSA is an integral component of the rating decision. Maintaining sound internal controls, retention of key management personnel and diligent monitoring of risks is important.

About the Entity
	Legal Structure	Private Limited
	Year of Establishment	23-Sep-03
	Type of License	Trading and Self-clearing
	Majority Ownership	Bank Alfalah Limited ~62%

Regulatory Disclosures	Analyst	Applicable Criteria	Related Research
	Afnan Iqbal afnan.iqbal@pacra.com +92-42-35869504 www.pacra.com	Methodology | Broker Fiduciary Rating | Jan-23	Sector Study | Brokerage & Securities | Jan-23

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