SECP orders phased adoption of shariah-compliant trading mechanism
MG News | September 01, 2025 at 02:20 PM GMT+05:00
September 01, 2025 (MLN) : The Securities and Exchange Commission of
Pakistan (SECP) has directed its licensed entities to adopt concrete measures
for facilitating the growth of Shariah-compliant intermediary services, in line
with the constitutional mandate to gradually eliminate riba from the financial
sector.
Under the new
directive, Shariah-compliant institutional investors within SECP’s regulatory
domain are now required to route their securities trading transactions through
Shariah-compliant securities brokers in a phased manner.
This mandate applies
to takaful operators, window takaful operators, and other Shariah-compliant
licensed entities, including non-banking finance companies, collective
investment schemes, voluntary pension schemes, modarabas, modaraba management
companies, private funds, and securities brokers.
In the first phase,
these institutional investors must formulate an internal policy by December
31, 2025, and begin quarterly reporting of their progress, along with any
implementation challenges, starting March 31, 2026. By June 30, 2026,
each entity must include at least one Shariah-compliant securities broker in
its approved panel.
The second phase,
spanning July 1, 2026, to June 30, 2027, requires these investors to
route at least 20 percent of their securities trading business through
Shariah-compliant securities broker(s).
Upon completion of
this phase, SECP will determine the future course of action based on both
entity-wise and sector-wide progress.
Additionally,
Shariah-compliant licensed entities have been strongly encouraged to
switch to takaful for insurance coverage and utilize Shariah-compliant asset
management services for investment purposes.
The SECP has also
advised the Pakistan Stock Exchange (PSX) to ensure timely development
of a Shariah-compliant trading mechanism and enhance awareness of
Shariah-compliant brokerage services.
The Exchange has been directed to coordinate
with Trading Rights Entitlement (TRE) Certificate Holders to offer such
services either through outright conversion, creation of a subsidiary, or
establishment of window operations.
Meanwhile, the Central Depository Company (CDC) has been tasked with enhancing visibility for Shariah-compliant intermediaries by creating a dedicated category on Asaan Connect, Emlaak Financials, and the digital applications of Islamic banks, in coordination with the State Bank of Pakistan (SBP).
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