Written by Malik Abbas, CEO of CoinConnect
TL;DR
- The PVARA Broker-Dealer license authorizes dealing in virtual assets as principal or agent, arranging and executing customer orders, and placement or distribution for issuers — at PKR 100 million (~$360,000) capital.
- It is the second-lowest capital tier, making it the natural entry point for intermediaries that do not run a venue or custody assets.
- The core duties are Best Execution (when acting as agent) and Fair Pricing (when acting as principal) — and you cannot delegate best execution away.
- Routing customer orders to your own affiliated venue, or against your own book, is allowed but tightly conflict-controlled and must be disclosed.
- A broker-dealer license does not, by itself, let you run custody, margin, lending or derivatives — and you cannot use "incidental" holding to avoid a custody license.
Table of Contents
- What is a PVARA Broker-Dealer license?
- Capital and eligibility requirements
- What the license covers (and what it does not)
- The core duty: Best Execution and Fair Pricing
- Agency versus principal: a worked example
- Order handling and fairness between customers
- Execution venues, routing and affiliated venues
- Internalization and request-for-quote
- Dealing as principal and proprietary trading
- Appropriateness for complex products
- Placement and distribution for issuers
- Customer assets — incidental holding only
- How the broker-dealer license pairs with other categories
- Disclosures, agreements and reporting
- Common mistakes
- FAQ
What is a PVARA Broker-Dealer license?
A PVARA Broker-Dealer license authorizes a company to deal in virtual assets as principal or agent, receive and execute customer orders, and provide placement or distribution services for issuers in Pakistan. Defined in Regulation 4(1)(b) of the Virtual Asset Services Regulations, 2026, it requires PKR 100 million in minimum paid-up capital and centers on two duties: Best Execution and Fair Pricing.
This is the deep dive on the broker-dealer category. For the full set of ten, see our PVARA license categories overview; for the big picture, the complete licensing guide.
Conversions use an indicative rate of PKR 278 = USD 1 (June 2026).
Capital and eligibility requirements
The broker-dealer license is the second-lowest capital tier in Schedule I: PKR 100 million (~$360,000) minimum paid-up capital, held "at all times" under Regulation 31(1). This is share capital inside your Pakistani company, not a fee — see the full capital breakdown.
Beyond capital, broker-dealer applicants must satisfy the general eligibility bars: a Pakistani company (Regulation 5), a resident key individual with real authority (Regulation 10(4)), a resident compliance officer (Regulation 23), and fit-and-proper directors, controllers and a qualified CEO (Regulation 8, Schedule III). The lower capital figure makes this an attractive entry point for intermediaries — but the conduct obligations are substantial, because a broker stands between the customer and the market.
For firms that want to test demand first, a reduced-capital, limited-scope license under Regulation 7(5) may be available with customer and product caps.
What the license covers (and what it does not)
Under Broker-Dealer Services Handbook section 3(2), a broker-dealer may receive and transmit customer orders, execute orders on behalf of customers, deal as principal or agent, trade on its own account where expressly permitted, and provide placement or distribution services for issuers.
What it does not cover is just as important. Section 3(3) provides that a broker-dealer authorization cannot be used to provide "discretionary portfolio management, custodial control, transfer and settlement activity, lending and borrowing activity, derivatives and leverage activity, or issuance activity" where the service falls within another license category. The broker-dealer license is an intermediation license — not a backdoor into custody, lending or leverage.
The core duty: Best Execution and Fair Pricing
Everything in this category turns on getting the customer the right outcome. The Handbook splits the duty by capacity.
When acting as agent, the broker owes Best Execution. Section 10(1) requires it to "take all reasonable steps to obtain the best possible result for its Clients, taking into account price, costs, speed, likelihood of execution and settlement, size, nature and any other relevant consideration."
When acting as principal — including via request-for-quote or internalization — the broker owes Fair Pricing: pricing that is "fair, transparent and non-discriminatory, consistent with its disclosed pricing policies and prevailing market conditions" (section 10(2)). And the responsibility cannot be passed off: section 10(2) states plainly, "No licensee shall delegate its responsibility of best execution of it's client orders."
Best Execution is not a guarantee of the best price every time. Section 10(7) clarifies it requires "reasonable steps, documented policy, ongoing monitoring and conduct consistent with the Licensee's business model and the Client's legitimate interests." You must maintain a written Execution Policy describing the factors you weigh, the venues you use, and how you monitor and remediate execution quality (section 10(4)).
Agency versus principal: a worked example
The agency-versus-principal distinction is not academic — it changes the duty you owe on every single order, so it is worth seeing in practice.
Suppose a customer wants to buy 10 BTC. If the broker acts as agent, it sends that order out to one or more execution venues and is judged on Best Execution: did it take all reasonable steps to get the best overall result across price, cost, speed and likelihood of execution and settlement? Its records must show the venues considered and why the chosen route served the customer.
If instead the broker fills the order as principal — selling 10 BTC from its own inventory at a quoted price — it is judged on Fair Pricing: was the price consistent with prevailing market conditions across reasonably available liquidity sources, and was the customer not systematically disadvantaged (section 10(3))? Here the broker is the counterparty, so the conflict is direct, and section 14(2) requires the principal capacity to be clearly disclosed and the trade not "structured or timed so as to disadvantage the Client."
Many brokers operate in both capacities depending on the order. That is permitted, but section 4(4) requires the broker to "clearly identify the relevant capacity in the Client Agreement and in its disclosures." The practical discipline is simple: for every order type, know which duty applies, disclose it, and keep records that prove you met it. Section 10(6) puts the burden squarely on the broker — for off-market or over-the-counter trades, "the burden of demonstrating compliance with the applicable Best Execution or Fair Pricing standard remains with the Licensee."
Order handling and fairness between customers
A broker must handle orders "promptly, fairly and expeditiously" (section 9(1)), and — crucially — orders for different customers "shall not be unfairly prejudiced in favor of the Licensee, its Proprietary Trades, related parties, affiliated venues, preferred liquidity providers or other Clients" (section 9(2)).
The order-handling policy must address receipt and validation, time-stamping and sequencing, priority rules where customer orders compete, handling of partial fills and erroneous orders, and aggregation and allocation. On aggregation, section 13 permits combining customer orders with each other or with proprietary trades only where it is "unlikely overall to disadvantage any Client" and has been disclosed — and it prohibits using aggregation or allocation "to mask preferential treatment, front-running or misuse of Client Order information."
Execution venues, routing and affiliated venues
Where a broker chooses where to send orders, that choice must serve the customer. Section 11(4) prohibits routing customer orders to a venue "solely because the venue provides the Licensee with rebates, revenue-sharing, reciprocal business or other benefits inconsistent with the Licensee's obligations to Clients."
Routing to your own venue is the sharpest conflict, and the Handbook addresses it head-on. Under section 12, where a broker routes or executes customer orders on an exchange operated by itself or an affiliate, it must disclose the relationship "in a clear and prominent manner," ensure customers "are not disadvantaged relative to comparable orders routed to comparable third-party venues," and must not "represent routing to an affiliated venue as neutral or market-wide if, in substance, its execution model favors that venue." There is also a transparency trigger in section 7: if 20% or more of customer orders are routed to any single liquidity source, the broker must disclose that source.
Internalization and request-for-quote
Two execution models deserve special attention because they put the broker on the other side of the customer's trade. "Internalization" is defined in section 2 as executing a customer order against the broker's own account, inventory, principal book, affiliated liquidity or another customer order without sending it to an external venue. A request-for-quote (RFQ) arrangement is similar in effect: the customer asks for a price, and the broker quotes from its own book.
Both are permitted, and both attract the Fair Pricing duty rather than agency Best Execution. Section 10(3) requires that where a broker executes against its own account or through internalization, "the price is consistent with prevailing market conditions across reasonably available liquidity sources" and customers "are not systematically disadvantaged as a result of such execution." The compliance challenge is evidential: because there is no external venue print to point to, the broker must be able to show, after the fact, that its quoted price was fair against the wider market at the time. That means capturing reference prices, documenting the pricing methodology, and monitoring outcomes — exactly the controls section 10(4)'s Execution Policy is meant to contain.
Dealing as principal and proprietary trading
A broker may deal as principal to fill customer orders, support placements, manage inventory or make markets (section 14(1)) — but the conflict between serving customers and trading for its own book must be controlled. When dealing as principal against a customer, section 14(2) requires the capacity to be clearly disclosed, the pricing to be fair, and the transaction not to be "structured or timed so as to disadvantage the Client."
Proprietary trading controls must specifically prevent "front-running of Client Orders," "misuse of Client Order information," and "unfair preference of Proprietary Trades over Client Orders" (section 14(3)), subject to risk limits and board oversight. This sits alongside the general dealing-as-principal and personal-account rules in Regulations 55–56.
Appropriateness for complex products
A broker that offers complex or higher-risk products to customers takes on an additional gating duty. Under section 15(2), where a broker offers execution-only or non-advised services in "complex or higher-risk Virtual Asset products, including derivatives, leveraged positions, structured products or similarly complex arrangements," it must assess whether the product or service is appropriate for the customer.
That appropriateness assessment, under section 15(3), requires the broker to obtain information about the customer's "knowledge and experience in relation to the specific type of product or service concerned." And where the broker crosses into advice or discretionary management, section 15(1) pulls in the suitability requirements of the Advisory Services Handbook and the Management and Investment Services Handbook. The practical point: the more complex the product, the more the broker must know about the customer before letting them trade it — and the records must prove the assessment happened.
Placement and distribution for issuers
A broker that helps issuers place or distribute tokens takes on gatekeeper duties. Section 16 requires due diligence on the issuer and the asset, "fair and not misleading marketing and distribution communications," fair allocation of offerings, and management of affiliated-issuer conflicts. Section 16(2) sets a hard line: a broker "shall not distribute, place or intermediate the offer of a Virtual Asset where it knows, suspects, or ought reasonably to know that the disclosures, statements or marketing materials used are false, misleading, deceptive or materially incomplete." Where placement connects to a token issuance, the Issuance Services Handbook also applies.
Customer assets — incidental holding only
This is the boundary that most often trips brokers into needing a second license. A broker-dealer may hold customer assets only incidentally. Section 17(1) limits such holding to "temporary operational possession strictly necessary for execution, transfer, or settlement" — it must not amount to ongoing custody.
And you cannot engineer around it. Section 17(2) prohibits using "incidental holding arrangements to circumvent the requirement to obtain a Custody Services License where the substance of the activity involves ongoing holding, safeguarding, administration or control of Client Assets." Like every other category, section 17(4) bars using, lending, pledging or staking customer assets on the broker-dealer license alone without explicit consent. And section 17(6) confirms a broker-dealer authorization "shall not of itself entitle a Licensee to provide a standalone margin financing, lending, borrowing, leveraged or derivatives business." If you hold assets on an ongoing basis, you need a Custody license too.
How the broker-dealer license pairs with other categories
Because the broker-dealer license is deliberately narrow, most real businesses pair it with one or more other categories — and planning that stack early avoids both under-authorization and over-capitalization.
The most common pairing is broker-dealer plus custody. If your brokerage holds customer balances between trades rather than settling them straight back to the customer's own wallet, you have crossed from incidental holding into ongoing custody, and you need the Custody license (PKR 200 million) alongside the broker-dealer license (PKR 100 million). A broker that also routes to its own venue will hold an Exchange license too. And a broker offering leveraged products needs the Derivatives and Leverage category — the broker-dealer license alone will not carry it.
Capital for a multi-category licensee is set on a risk basis under Regulation 31(2), not by mechanically summing each figure, but you should still budget from the highest applicable category upward and expect add-ons. The cleanest way to scope this is to start from your actual activity and work outward; our PVARA license categories overview sets out how the ten categories interact.
Disclosures, agreements and reporting
A broker must publish clear disclosures (section 7) covering whether it acts as agent, principal or both; its order-handling and execution arrangements; its Best Execution or Fair Pricing approach; and all material fees, commissions, spreads and mark-ups. The client agreement (section 8) must specify the capacity in which the broker acts, the order types and execution venues used, when it may deal as principal, and the risks of any leveraged or higher-risk products.
Ongoing, the broker produces management information on execution quality, order-handling exceptions and complaints (section 20), and must report to the Authority "material breaches," "serious or systemic execution failures," "material pricing control failures," and "incidents of suspected market abuse or misuse of Client Order information." Record-keeping under section 19 must be detailed enough to reconstruct individual orders and executions.
Common mistakes
- Treating the broker license as all-purpose. It does not cover custody, transfer and settlement, lending, derivatives or discretionary management — each needs its own category.
- Holding customer assets on an ongoing basis. "Incidental" means temporary and settlement-related; anything more requires a custody license.
- Routing for rebates. Sending orders to a venue for the broker's benefit, not the customer's, breaches section 11(4).
- Hiding affiliated-venue routing. Routing to your own exchange must be prominently disclosed and genuinely non-disadvantageous.
- Weak principal-dealing controls. Front-running and misuse of order information are precisely what the proprietary-trading rules target.
- Skipping appropriateness checks on complex products. Offering leveraged or structured products without assessing customer knowledge and experience breaches section 15.
Get the execution and conflicts framework right and the broker-dealer license is an efficient, lower-capital way into Pakistan; treat best execution as a formality and you will fail conduct supervision. To map the requirement against your model, start with our PVARA licensing service or the foreign-entrant playbook.
Frequently asked questions
PKR 100 million (~$360,000) in minimum paid-up capital under Schedule I, held at all times. It is the second-lowest capital tier. The figure is share capital inside your Pakistani company, not a fee, and may be reduced under a restricted license (Regulation 7(5)).
An exchange operates a trading venue that matches multiple participants' orders. A broker-dealer intermediates — receiving, executing or dealing against customer orders. The broker license costs far less capital (PKR 100 million vs PKR 1 billion) but does not authorize running a venue.
When acting as agent, a broker must take all reasonable steps to obtain the best possible result for the customer, considering price, cost, speed, likelihood of execution and settlement, size and nature (Handbook section 10). It cannot be delegated, though it is not a guarantee of the best price every time.
Yes, as principal, but only with clear disclosure of capacity, fair and transparent pricing, and strict controls against front-running and misuse of customer order information (Handbook section 14).
Only incidentally — temporary possession strictly necessary for execution or settlement. Ongoing holding requires a separate custody license, and incidental holding cannot be used to avoid that requirement (Handbook section 17).
No. A broker-dealer authorization does not, by itself, permit standalone margin financing, lending, borrowing, leverage or derivatives — those require the relevant separate license categories.
Best Execution applies when the broker acts as agent and routes the order to a venue — it must take all reasonable steps to get the best overall result. Fair Pricing applies when the broker acts as principal, internalizes or quotes via RFQ — the price must be fair, transparent and consistent with prevailing market conditions (Handbook section 10).
Yes. For execution-only services in complex or higher-risk products such as derivatives or leveraged positions, the broker must assess appropriateness by obtaining information on the customer's knowledge and experience (Handbook section 15).
Setting up a virtual asset brokerage in Pakistan? CoinConnect builds the execution policy, conflicts framework and broker-dealer application PVARA expects — and flags exactly where you also need custody or other categories. Book a free 30-minute discovery call →
Last reviewed: June 2026. Based on the draft Pakistan Virtual Asset Services Regulations, 2026 and the Broker-Dealer Services Handbook, 2026, published for public consultation. Provisions are subject to change pending finalization.
External sources: PVARA · SECP · State Bank of Pakistan