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Karachi: VIS Credit Rating Company Ltd. (VIS) has maintained the Broker Management Rating of Mohammad Munir Muhammad Ahmed Khanani Securities Limited (MMMAKSL) at ‘BMR2’, while revising the outlook from ‘Stable’ to ‘Negative’. This rating action follows a penalty imposed by the Pakistan Stock Exchange (PSX) for the company’s operation of unregistered branches, highlighting areas of concern within MMMAKSL’s internal controls and compliance framework.
The rating reflects the company’s compliance and risk management framework, with sound regulatory requirements, internal and external controls, client relationship management, and infrastructure. Financial management and supervision frameworks are deemed adequate.
MMMAKSL, a public unlisted company, offers equity and commodity brokerage services and research to both institutional and retail clients. The company, led by CEO Muhammad Munir Khanani, operates offices in Karachi, Lahore, Hyderabad, and Islamabad, providing online and assisted trading services. It holds a Trading Rights Entitlement Certificate from the Pakistan Stock Exchange and is registered with the Securities and Exchange Commission of Pakistan (SECP) for Trading and Self Clearing Services. The company’s external auditors, Rehman Sarfaraz Rahim Iqbal Rafiq Chartered Accountants, are recognized in the ‘A’ category by the State Bank of Pakistan.
The revision in the rating outlook underscores the need for MMMAKSL to enhance its internal control systems and ensure regulatory compliance to maintain its rating. The company’s governance framework includes a board with five members, two of whom are independent directors, and four board committees. The external control framework is considered robust, and client services are supported through online and mobile trading applications and prompt trade alerts. However, the company is encouraged to improve investor grievance procedures on its website.
Financial assessments show a significant increase in profitability, driven by higher operating revenue and realized gains, leading to improved operational efficiency. Despite these positive indicators, the company’s market risk remains elevated, and its liquidity profile, while adequate, requires attention. The company’s sizeable equity base supports its capitalization profile, but maintaining earnings sustainability and improving market risk, liquidity, gearing, and leverage ratios will be crucial for future ratings.