The Securities and Exchange Commission of Pakistan (SECP) has issued a directive for its licensed entities to implement measures supporting the growth of Shariah-compliant intermediary services, in line with the constitutional goal to gradually eliminate riba from the financial sector.
Under the directive, Shariah-compliant institutional investors regulated by SECP are required to route their securities trading transactions through Shariah-compliant securities brokers in a phased approach.
The mandate covers takaful operators, window takaful operators, and other licensed entities including non-banking finance companies, collective investment schemes, voluntary pension schemes, modarabas, modaraba management companies, private funds, and securities brokers.
In the first phase, entities must prepare an internal policy by December 31, 2025, and begin quarterly reporting of progress and implementation challenges from March 31, 2026. By June 30, 2026, each entity must include at least one Shariah-compliant securities broker in its approved panel.
The second phase, from July 1, 2026, to June 30, 2027, requires at least 20 percent of securities trading to be routed through Shariah-compliant brokers. SECP will review both entity-level and sector-wide progress to determine subsequent actions.
Entities have also been encouraged to adopt takaful for insurance coverage and use Shariah-compliant asset management services.
The SECP has advised the Pakistan Stock Exchange (PSX) to develop a Shariah-compliant trading mechanism and increase awareness of Shariah-compliant brokerage services. The Exchange has been instructed to work with Trading Rights Entitlement (TRE) certificate holders to provide services via conversion, subsidiaries, or window operations.
The Central Depository Company (CDC) has been tasked with increasing visibility for Shariah-compliant intermediaries through dedicated categories on Asaan Connect, Emlaak Financials, and digital applications of Islamic banks, in coordination with the State Bank of Pakistan (SBP).
