FM forms Capital Market Council, orders review of taxation framework

November 28, 2025 (MLN): Pakistan has set up a Capital Market Development Council (CMDC) to steer wide-ranging reforms across the country’s financial markets, as Finance Minister Senator Muhammad Aurangzeb directed regulators and government bodies to review capital market taxation, issuer-side incentives, and frameworks for encouraging listings.

The newly established council held its inaugural meeting in Islamabad, bringing together senior representatives from all major financial-sector institutions to outline a coordinated roadmap for strengthening Pakistan’s capital markets amid ongoing structural reforms, said a press release issued today.  

Chaired by the Finance Minister at the Finance Division, the meeting gathered leadership from the SECP, State Bank of Pakistan, Pakistan Banks Association, Pakistan Stock Exchange, Central Depository Company, NCCPL, Pakistan Business Council, and the Finance Division.

Participants reviewed the Terms of Reference and discussed a structured strategy aimed at broadening market participation, deepening liquidity, improving access to finance, and encouraging both debt and equity capital raising.

Key discussions centred on increasing retail and institutional investor participation, developing a wider suite of investment products, and enhancing the role of intermediaries such as banks, brokers, and mutual funds.

The Council also examined requirements for cross-border market integration, technology alignment, and the need for regulatory modernization to support more efficient price discovery and transparent trading practices.

A significant portion of the meeting focused on taxation, identified as a major factor affecting market competitiveness.

The Finance Minister directed the Tax Policy Office, SBP, SECP, Debt Management Office, and Finance Division to jointly reassess tax policies governing capital-market transactions, incentives for issuers, and measures to promote wider corporate listings.

Officials emphasized the importance of policies that reward compliant and transparent companies rather than penalizing them, particularly as Pakistan seeks to expand fundraising through the debt capital market.

The Council also agreed to integrate the government’s new three-tiered digitization initiative into capital-market reforms, aiming to streamline processes, reduce inefficiencies, and improve regulatory oversight.

To operationalize the roadmap, dedicated working groups will be formed across priority areas, tasked with preparing KPIs and action plans within two weeks. The CMDC will receive quarterly progress reports, with meetings scheduled at least once every quarter.

The formation of the CMDC marks an effort to build a dynamic, high-liquidity capital market ecosystem capable of channelling domestic savings into productive investment, supporting economic growth, and enhancing long-term financial stability.

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