SECP approves first independent Shariah screening process for capital market securities

The Securities and Exchange Commission of Pakistan (SECP) has approved Al-Hilal Shariah Advisors (Pvt) Limited to independently conduct Shariah screening of securities, making it the first entity outside the Pakistan Stock Exchange (PSX) and its existing partners to receive such approval.

According to SECP, the approval allows the company to screen securities for Shariah compliance for clients and the public, creating an alternative mechanism for Shariah screening in Pakistan’s capital market.

Under the Shariah Governance Regulations, 2023, any entity declaring securities as Shariah-compliant must use a screening process approved by the SECP.

Currently, Shariah screening of listed companies at PSX is carried out by the exchange in collaboration with Meezan Bank Limited and Al-Meezan Investments. Out of 535 listed securities at PSX, 308 are classified as Shariah-compliant, representing a market capitalization of Rs12,373 billion — about 63 percent of the total market capitalization of Rs19,679 billion as of December 31, 2025.

The SECP said the approval provides a regulatory framework for additional screening arrangements and is expected to support the development of Islamic investment benchmarks.

Al-Hilal Shariah Advisors is an SECP-licensed Shariah advisory firm providing governance, compliance and advisory services to financial institutions, capital market participants and corporate entities.

The screening process will use the latest available financial information and will include rules for inclusion and exclusion of securities from the Shariah-compliant list, along with a compliance mechanism to ensure adherence to regulatory requirements.

The regulator said the company will coordinate with the Pakistan Stock Exchange before launching any Shariah-compliant index, and the updated list of compliant securities will be issued quarterly instead of the earlier six-month screening cycle.