Press Release

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

Karachi, March 15, 2024: VIS Credit Rating Company Ltd. (VIS) has reaffirmed Broker Fiduciary Rating of ‘FDM Capital Securities (Private) Limited (FDMCSL) at ‘BFR3’. Rating of BFR3 denotes good fiduciary standards. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on January 03, 2023.

The assigned rating signifies sound management and client services and internal controls and regulatory compliance, while ownership and governance and business and financial sustainability are 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. Disclosure levels of the Company has improved, with the inclusion of the statement of compliance with the code, the director's report, and the CEO's statement in the report, alongside the auditor's report, which was already published therein .The management and client services of the Company is considered sound, with various client facilitation tools in place in order to support clients in executing transactions, however, Complaint management tools maybe further improved through greater visibility. Moreover, disclosure of commission rates on website has bode well for the rating. 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. 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. Similarly, establishing a separate risk management function may provide further strength to the control framework.

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 rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.




Applicable Rating Criteria: Broker Fiduciary Ratings:
https://docs.vis.com.pk/docs/BrokerFiduciary012021.pdf

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

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .