Broker-Dealer Services and the Own-Account Exemption

Pakistan’s Virtual Assets Act, 2026 licenses five distinct activities under a single heading — Broker-Dealer Services — and then, in the middle of that same Schedule I entry, carves one type of trading firm back out of the definition entirely. Getting the boundary right matters, because a business that reads only the opening words of item 2 can miss both the breadth of what is covered and the one route that avoids the licence altogether.

This article sets out the five limbs of Broker-Dealer Services under Schedule I item 2, the own-account exemption sitting between limbs (c) and (d), and how the category connects to PVARA’s phased licensing pathway.

What are Broker-Dealer Services under Schedule I item 2?

Schedule I item 2 defines Broker-Dealer Services as any of five listed activities. The Act states the category “means any of the following”:

“(a) arranging or facilitating orders for the purchase and sale of Virtual Assets between two parties; (b) soliciting or accepting orders and receiving consideration in fiat currency or Virtual Assets; (c) trading Virtual Assets on the Virtual Asset Service Provider’s own account; (d) market-making using Customer Assets; or (e) providing placement or distribution services for Issuers acting as intermediaries.”

Because the definition uses “any of the following” rather than requiring all five together, a firm engaged in only one of these activities — say, only market-making with Customer Assets under limb (d) — still falls within the Broker-Dealer Services category and needs the corresponding licence, without needing to also arrange orders or solicit consideration under the other limbs.

What do limbs (a) and (b) actually cover, and how do they differ?

Limb (a) covers arranging or facilitating orders for the purchase and sale of Virtual Assets between two parties — the firm acts as an intermediary bringing a buyer and a seller together, without necessarily taking the order itself or handling the consideration. Limb (b) covers soliciting or accepting orders and receiving consideration in fiat currency or Virtual Assets — a narrower, transaction-handling activity where the firm actually takes the order and the payment, rather than simply connecting two other parties.

A business can sit inside either limb independently. A pure order-matching platform that never touches customer funds may fall under limb (a) alone; a firm that takes customer orders and receives their payment directly, even without matching them against another specific counterparty, falls under limb (b).

What is the own-account trading exemption, and who qualifies for it?

This is the single most consequential line in item 2, because it removes an entire category of trading firm from the Broker-Dealer Services licence. Immediately after limb (c), the Act states:

“Exemption: A Person that deals solely on its own account, does not execute orders on behalf of customers, and does not hold or control Customer Assets is not regarded as carrying on ‘broker-dealer services’ for the purposes of this Act.”

Three conditions have to be met together for the exemption to apply: the firm deals solely on its own account, it does not execute orders on behalf of customers, and it does not hold or control Customer Assets. All three are conjunctive — a proprietary trading firm that meets the first two conditions but somehow ends up holding a customer’s Virtual Assets, even briefly, loses the exemption and falls back into the licensed category. This is a narrow carve-out for genuine proprietary trading, not a general exemption for any firm that mostly trades its own book.

Why does limb (c) exist at all if own-account trading can be exempt?

Limb (c) and the exemption immediately after it work together rather than in contradiction. Limb (c) states that “trading Virtual Assets on the Virtual Asset Service Provider’s own account” is a Broker-Dealer Service — this establishes the default position that own-account trading by a Virtual Asset Service Provider is regulated activity. The exemption then narrows that default: a firm that meets all three conditions of the exemption is not treated as carrying on broker-dealer services, notwithstanding limb (c).

The practical effect is that the exemption is not automatic simply because a firm calls itself a proprietary trading operation. A firm that also executes orders on behalf of clients elsewhere in its business, or that holds Customer Assets for any other line of its operations, does not get the benefit of the exemption for its own-account trading desk — the conditions apply to the Person, not to a single trading strategy within a larger regulated business.

What is market-making using Customer Assets, and why is it treated differently from the own-account exemption?

Limb (d) covers market-making using Customer Assets — a distinct activity from limb (c)’s own-account trading, because it involves deploying assets that belong to customers rather than the firm’s own balance sheet to provide liquidity or two-sided quotes. The exemption after limb (c) applies only to trading solely on the firm’s own account; it has no application to market-making conducted with Customer Assets, since that activity by definition fails the exemption’s third condition — not holding or controlling Customer Assets.

A firm that markets itself as an exempt proprietary trader while using pooled customer funds to support its market-making activity is operating limb (d) activity, not exempt own-account trading, regardless of how the arrangement is described internally.

Is Broker-Dealer Services one of PVARA’s AML-Registered Services?

Yes. Regulation 2.3 of PVARA’s No Objection Certificate Regulations 2025 designates Broker-Dealer Services as one of four “AML Registered Services,” alongside Custody, Exchange and Virtual Asset Derivatives Services. This means a firm granted a No Objection Certificate (“NOC”) may begin providing broker-dealer activity before a full licence is issued, once it has completed registration on the goAML portal — the phased pathway available under Regulation 2.3, ahead of the full licence required under section 21 of the Act.

That phased route does not remove the underlying licensing requirement — Regulation 18.1(f) of the NOC Regulations requires a registered applicant to “apply for and progress diligently toward a full VASP License within the time period required by the Authority,” and section 21 of the Act still governs the grant of the eventual licence itself.

What should a firm assessing whether it needs a Broker-Dealer Services licence check first?

• Test each of the five limbs separately, since the “any of the following” structure of item 2 means a single qualifying activity — order arranging, order and consideration handling, own-account trading, market-making with Customer Assets, or placement and distribution for Issuers — is enough to bring the firm inside the licensed category.
• Confirm all three conditions of the own-account exemption hold across the whole Person, not just for one trading desk, since holding or controlling Customer Assets anywhere in the business defeats the exemption even where the trading itself is genuinely proprietary.
• Treat market-making with pooled customer funds as limb (d) activity by default, given that the exemption’s third condition rules it out of the own-account carve-out on its face.
• Sequence the licensing pathway using Regulation 2.3, since Broker-Dealer Services is one of the four services eligible for the NOC-plus-goAML phased route, rather than requiring a full licence from day one.

About this analysis

This analysis was prepared by the CoinConnect research desk from the Virtual Assets Act, 2026 — Schedule I item 2 and section 21 — read alongside PVARA’s No Objection Certificate Regulations 2025, Regulation 2.3 and Regulation 18.1. Where practice is not yet settled or guidance has not been issued, that is stated in the text above.

Regulatory positions change and specific requirements should be verified against the current position published by the relevant authority before you act on them. This is information and analysis, not legal advice, and it does not create an advisory relationship. Take professional advice on your own circumstances.