ISLAMABAD – The Securities and Exchange Commission of Pakistan (SECP) has directed its relevant licensed entities to adopt concrete measures for facilitating the growth of Shariah-compliant intermediary services. The directive aligns with the constitutional mandate to eliminate riba from the financial sector gradually.
Shariah-compliant institutional investors under the SECP’s regulatory domain are now mandated to route their securities trading transactions through Shariah-compliant securities brokers in a phased manner. This requirement applies to takaful operators, window takaful operators, and other Shariah-compliant licensed entities, namely 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. They are required to report their progress, along with any implementation challenges, on a quarterly basis starting March 31, 2026, and must include at least one Shariah-compliant securities broker in their approved panel by June 30, 2026.
In the second phase, which runs from July 1, 2026, to June 30, 2027, these investors must route at least 20 percent of their securities trading business through Shariah-compliant securities broker(s). Following the conclusion of the second phase, the Commission will determine the way forward based on the progress achieved, both entity-wise and sector-wise. Furthermore, Shariah-compliant licensed entities have been strongly encouraged to switch to takaful for their insurance needs and to use Shariah-compliant asset management services for investment purposes. The SECP has also advised the Pakistan Stock Exchange (PSX) to ensure the timely development of a Shariah-compliant trading mechanism and to enhance market awareness regarding Shariah-compliant brokerage services. The Exchange is required to coordinate with Trading Rights Entitlement (TRE) Certificate Holders to offer Shariah-compliant brokerage services through outright conversion, the formation of a subsidiary, or the establishment of window operations. In addition, the Central Depository Company has been directed to provide greater visibility to Shariah-compliant intermediaries by creating a dedicated category for them on Asaan Connect, Emlaak Financials, and the digital apps of Islamic banks, in coordination with the State Bank of Pakistan.
