Pakistan’s capital market moves to T+1 settlement cycle

Pakistan’s capital market has moved to a T+1 settlement cycle, with all eligible trades at the Pakistan Stock Exchange now being settled one day after the transaction date.

The change took effect on February 9, 2026, replacing the previous T+2 settlement system, according to an official statement issued on Tuesday. Under the new mechanism, trades are settled on a Trade plus one basis.

The transition was carried out under the supervision of the Securities and Exchange Commission of Pakistan in coordination with the Pakistan Stock Exchange, National Clearing Company of Pakistan Limited, Central Depository Company, Pakistan Stock Brokers Association, State Bank of Pakistan, Pakistan Banks Association, Mutual Fund Association of Pakistan, securities brokers, custodian clearing members, asset management companies, settling banks, E-Clear and other non-broker clearing members.

With this move, Pakistan joins markets such as the United States, Canada, Mexico, Argentina, Jamaica and China, which have already adopted shorter settlement cycles. European markets, the United Kingdom and Switzerland are expected to implement similar systems by 2027.

According to the statement, the T+1 framework allows faster access to funds and securities, improves liquidity and reduces settlement and counterparty risk by shortening exposure periods. The quicker completion of trades is also aimed at strengthening investor confidence, including among institutional and foreign investors.

SECP Chairman Dr Kabir Ahmed Sidhu said the reform brings Pakistan’s capital market in line with modern jurisdictions by accelerating settlement timelines, reducing market and counterparty risks and improving liquidity. He added that adoption of the T+1 cycle would enhance investor confidence and align the market with evolving international standards.

The SECP described the shift as part of a broader policy initiative to modernise capital markets, lower systemic risk and strengthen investor protection, while PSX, NCCPL and CDC acknowledged the coordination of stakeholders in implementing the new system.