SECP puts T+1 under review on market pressure

March 18, 2026 (MLN): The Securities and Exchange Commission of Pakistan has initiated a formal stakeholder consultation on the recently implemented T+1 settlement cycle.

This reflects a possible recalibration of the framework following mounting concerns across Pakistan’s capital market.

In a letter dated March 17, 2026, addressed to the leadership of Pakistan Stock Exchange, National Clearing Company of Pakistan Limited, and Central Depository Company of Pakistan Limited, the regulator acknowledged the need to reassess the operational, liquidity, and risk management implications emerging from the shift to a compressed settlement cycle.

The SECP stated that the consultation process aims to identify implementation challenges, evaluate the impact on market liquidity and investor participation, and develop a coordinated roadmap to ensure smoother and sustainable settlement operations.

The exercise is expected to commence immediately after Eid holidays and conclude within two weeks.

This development comes at a time when the transition to T+1 settlement, requiring trades to be settled within one business day, has triggered visible stress across the market ecosystem.

Lately, investors watched the benchmark index swing sharply, foreign funds continued their exit, and brokers struggled to meet next-day settlement obligations in a system still largely dependent on cheque-based transactions.

What was intended as a progressive reform aligned with global best practices has instead collided with ground realities.

Limited banking hours, further compressed during Ramadan, combined with delayed cheque clearances have created funding mismatches, forcing brokers to bridge liquidity gaps at their own risk.

The issue is not the reform itself, but its timing and execution.

Mettis Global also highlighted these concerns in its market coverage, noting that the abrupt, across-the-board implementation of T+1 has intensified liquidity pressures in an already volatile environment.

In exclusive conversations with Mettis Global, seasoned investors and high-net-worth individuals pointed to structural inefficiencies:

“One-day settlement works when the entire ecosystem is digitized. In our case, cheque-based transactions and banking cut-offs are not aligned,” said a portfolio investor with over two decades of experience.

Another investor emphasized that liquidity flexibility has diminished, adding that T+2 previously allowed critical breathing space for fund management during volatile sessions.

“The reform is not the problem, the pace is,” one participant summarized.

Global lesson, local challenge

While shorter settlement cycles are globally recognized for reducing counterparty risk and improving capital efficiency, international experience suggests that sequencing is key.

India, for instance, implemented T+1 in phases, starting with smaller stocks and gradually expanding coverage, allowing brokers, banks, and custodians to adapt without disrupting market stability.

In contrast, Pakistan’s simultaneous rollout across all scrips has exposed gaps in banking integration, payment systems, and operational readiness.

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