ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has introduced two concept papers aimed at advancing the short-term listed sukuk market in Pakistan.
These papers seek to engage public consultation on crucial issues and propose tailored regulatory measures to enhance the listing of short-term sovereign and corporate sukuk instruments.
Pakistan’s capital market already offers shariah-compliant borrowing solutions to both the Government of Pakistan (GOP) and the corporate sector. The development of a dynamic short-term sukuk segment would provide a broader range of shariah-compliant financial solutions, better serving the needs of both issuers and investors. Since December 2023, the GOP has actively raised funds through the capital market by issuing sovereign Ijara sukuk instruments.
To date, the Government of Pakistan has secured approximately PKR 713 billion through eleven auctions, issuing various sovereign Ijara sukuk instruments with maturities of 1, 3, and 5 years via the Pakistan Stock Exchange (PSX). However, the Ijara structure currently does not permit the issuance of short-term tradeable sovereign sukuks with 3, 6, or 9-month maturities. SECP now aims to explore alternative shariah-compliant structures for issuing tradeable sovereign sukuks with these shorter maturities.
Short-term sukuks are gaining popularity among capital market investors. Despite this, corporations often choose to structure these instruments as privately placed and unlisted, limiting their ability to tap into a broader investor base. The concept paper on the listing of short-term corporate sukuks outlines strategies to make such listings more attractive by improving efficiency, streamlining procedures, and reducing costs.
Proposed solutions include simplifying the issuance process for short-term listed sukuks by offering a condensed version of the Shelf Prospectus or Abridged Prospectus, enabling electronic publication of these documents, accelerating regulatory approval timelines, lowering regulatory costs, and offering greater flexibility in the appointment of intermediaries such as Centralized Transaction Intermediaries (CTIs) and underwriters.
The growth and development of the sukuk market aligns with SECP’s commitment to implementing the Federal Shariat Court’s ruling for a RIBA-free economy. Short-term sukuks are emerging as a favored financing alternative, both domestically and internationally.
The concept papers are available on SECP’s website and can be accessed through the following links:
i. Concept Paper on Listing of Short-Term Sovereign Sukuk
ii. Concept Paper on Listing of Short-Term Corporate Sukuk
Stakeholders are encouraged to submit their feedback by August 22, 2024, at [email protected].
