Press Release

VIS Reaffirms Broker Management Rating of FDM Capital Securities (Private) Limited

Karachi, March 15, 2024: VIS Credit Rating Company Ltd. (VIS) has reaffirmed Broker Management Rating of FDM Capital Securities (Private) Limited at ‘BMR3++. Outlook on the assigned rating is ‘Stable’. Last rating action was announced on January 03, 2023.

The rating signifies strong external control framework, sound compliance and risk management as well as client relationship & Fairplay, while regulatory requirement, supervision framework, Internal control framework, HR and infrastructure along with financial management is considered adequate.

FDM Capital Securities (Private) Limited was incorporated in July 2001. FDMCSL is principally engaged in brokerage of shares in ready and future market to local retail clients. The Company holds Trading Rights Entitlement Certificate (TREC) for Trading & Self Clearing Services granted by Pakistan Stock Exchange Limited (PSX). The Company has also acquired a membership of the Pakistan Mercantile Exchange Limited & Commodities Exchange (PMEX.) External auditors of the company are M/s Rahman Sarfaraz Rahim Iqbal Rafiq – Chartered Accountants. External auditors belong to category ‘A’ on the approved list of auditors published by the State Bank of Pakistan (SBP). The registered office of the Company is located at Suite No. 620-621, 6th Floor, Pakistan Stock Exchange Building, I.I Chundrigarh Road, Karachi, Pakistan.

Assigned rating takes into account the governance framework wherein the board is represented by three members with no independent directors in the same. Increasing the size of the Board and including independent directors may enhance the governance framework of the Company. Internal policies of the Company are in place. However, enhancing the scope of the same as well as formulating a separate conflict of interest policy may strengthen the internal controls of the Company. External control framework of the Company is considered strong given the strong disclosure levels. The Company has sound client relationship & fairplay, with trade facilitation tools encompassing online trade and mobile trading application in place. However, complaint management tools maybe further improved through greater visibility. Moreover, disclosure of commission rates on website has bode well for the rating. Increasing geographical footprints may be considered for business sustainability and growth of the Company. Contingency measures may be further strengthened by securing offsite backups at third party warehouse as well as increasing the frequency of conducting disaster recovery and business continuity exercises. Compliance and risk management is considered sound, however, establishing a separate risk management function may further improve the same.

Assessment of the Company's financial profile indicates a rebound in its earnings profile in 6MFY24. Consequently, the operational efficiency has experienced a notable improvement, albeit remaining on the higher side. The Company’s market risk remains elevated given sizeable short-term investments against equity. The liquidity profile of the Company is considered sound while capitalization indicators remain manageable. Going forward, augmentation of the revenue base and improvement in market risk will remain important for the rating. Moreover, maintenance of capitalization indicators as well as liquidity profile will also remain important rating considerations.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.





Applicable Rating Criteria: Broker Management Ratings:
https://docs.vis.com.pk/docs/BMR202007.pdf

VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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