The Pakistan Credit Rating Agency Limited
Date: 26-May-21
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Press Release
PACRA assigns Initial Broker Fiduciary Rating to Khadim Ali Shah Bukhari Securities Limited

Rating Details Rating Type Broker Fiduciary Rating
Current
26-May-21
Previous
--
Action Initial --
Rating BFR 3+ --
Outlook Stable --
Rating Watch - --

Rating Rationale Factor Description Comment
Ownership Good Major shareholding of the Company lies with Oxford Frontier Capital Limited i.e. ~44%. The sponsors' profile of the Company is considered good.
Governance Good On governance front, the Company is in process of improving its Board Structure in compliance with CCG.
Management and Client Services Strong Management team is well experienced while integration of technology into systems results in high efficiency and customer satisfaction.
Internal Controls and Regulatory Compilance Good Risk management framework and systems are adequate and company remains compliant with all applicable regulations.
Business Sustainability Good The Company registered a considerable growth amidst augmentation in client base but rating is constrained by the Company's significant dependence on equity brokerage income.
Financial Sustainability Good The Company is engaged in proprietary trading, albeit the quantum of proprietary investment is very low but exposes the Company to market risk.

Key Rating Drivers

The broker fiduciary rating of Khadim Ali Shah Bukhari Securities Limited's ("The Company") (Formerly: Khadim Ali Shah Bukhari Securities Private Limited) signifies the Company’s assurance towards satisfactory custodianship of client’s assets indicated by comprehensive Client Asset Segregation policy, Trading room policy and Market abuse policy. The Company occupies emerging position in the brokerage industry and is penetrating through online trading and mobile application. The Company has outsourced its internal audit function to AFRAS & Company, a practicing firm of consultants. Zero leveraged capital structure, improved liquidity indicators and recovery in efficiency ratios bodes well for the Company. The ratings are dependent on the management’s ability to strengthen revenue base by augmenting consultancy and advisory services. Retaining market share and sustaining profitability from core operations remain critical. Meanwhile, upholding strong internal controls and diligent monitoring of risks is important.


About the Entity
Legal Structure Public Limited
Year of Establishment 06-Jan-13
Type of License Trading and Self-clearing
Majority Ownership Corporate

Regulatory Disclosures Analyst Applicable Criteria Related Research
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com

Disclaimer

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.