KARACHI: The first Shariah-compliant trading platform in the Asia Pacific has been launched by Foundation Securities, one of the many subsidiaries of the Fauji Foundation Group.
Foundation Securities, which is also part of a local affiliate of Macquarie Capital, has launched the maiden Islamic trading platform in Pakistan to cater to an untapped market that was reluctant to participate in the Pakistan Stock Exchange (PSX) due to the non-availability of pure Shariah-compliant trading facilities.
The guidelines being followed have been communicated by the Meezan Shariah Board in this regard.
“Many investors don’t invest in the market directly as they don’t understand technical issues like T+2 trading and the difference between the ready market and future market. They prefer Islamic funds like Al-Meezan investments and others”, notes Syed Ahmed Zaidi, CEO of Foundation Securities.
“Using this platform, Shariah conscious investors do not have to worry about holding on to cash during downturns in the market. They can invest as per the Islamic rules while having the ability to withdraw at any time,” he added.
It may be noted here that while similar applications and services are available in North America, they are not backed by a large financial institution; this is a unique edge that Foundation Securities has.
Zaidi further says that he is confident about the demand for the trading platform. “Alhamdulillah, we are extremely excited at the launch of this unique trading platform that will gain massive popularity as many people avoid capital markets due to the non-availability of shariah-compliant platforms.”
The new platform is independent of the existing platform and available to all classes of investors.
DIFFERENT FROM CONVENTIONAL PLATFORMS
Features of the new Shariah-compliant trading platform include investment only in stocks in the KSE Meezan Index-All Share (KMI – All Share) index, 100 per cent cash basis (no leverage), only ready counter trade facility, no intra-day trading allowed, restriction on the sale of Letter of Rights, and investment in shariah-based Exchange Traded Fund Meezan Pakistan.
PSX-KMI All Share Index, developed by PSX and Meezan Bank, comprises of all shariah-compliant companies listed on the PSX Ltd. The index enlists 226 companies with 24 additions and 24 expulsions made in 2019.
No intraday trading means that investors can sell only after settlement in 2 days after the transaction, known at the PSX as t+2.
Foundation Securities (Pvt.) Limited is a full-service equities broking and investment banking firm with corporate membership of the PSX Ltd and the Pakistan Mercantile Exchange.
The firm marks the entry of Fauji Foundation in the financial services sector. It has also signed a strategic cooperation agreement with Macquarie Capital Securities Ltd, an affiliate of global financial institution Macquarie Group, covering investment banking and securities operations.