August 22, 2019 (MLN): The Securities and Exchange Commission of Pakistan has accorded regulatory approval with respect to Murabaha Share Financing (MSF) and has directed National Clearing Company of Pakistan Limited (NCCPL) to implement MSF System effective from September 2, 2019.

The introduction of MSF facility will benefit the investors who are willing to avail Shariah compliant products for purchase of securities and will facilitates the financiers in extending credit facility in a Shariah compliant manner.                               

The MSF will allow financing only in Shariah compliant securities included in the PSX-KMI All Share Islamic Index.                               

According to the official notice released by Pakistan Stock Exchange, following Agreements are required to be executed for undertaking MSF Transactions:                                     

• Master Murabaha Agreement (MMA): to be executed between MSF Seller and MSF Buyer before entering into any MSF Transaction. It covers the terms of extending the financing facility as per format available in NCCPL Regulations.                                                        
• MSF Agreement: to be executed between MFS Seller and MSF Buyer to purchase required security under MMA. This is a system based document needs to be executed before purchasing securities under the MMA.                                                               
• Agency Agreement: to be executed between Customer and Securities Broker and/or Securities Broker and Non-Broker Financier as the case may be to appoint the securities broker as an agent to perform MSF transaction as per format available in NCCPL Regulations.                            

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