Pakistan capital market shifts to T+1 settlement cycle

Pakistan’s capital market has officially transitioned to a T+1 settlement cycle, a major structural reform aimed at improving efficiency, reducing risk and aligning the market with international best practices, according to a press release from Pakistan Stock Exchange (PSX).

The new settlement mechanism became effective from February 9, 2026, under which all eligible trades at the PSX are now settled on a trade-plus-one (T+1) basis, replacing the earlier T+2 cycle.

The transition was implemented under the oversight of the Securities and Exchange Commission of Pakistan (SECP) in coordination with key market institutions, including the PSX, National Clearing Company of Pakistan Limited (NCCPL), Central Depository Company (CDC), Pakistan Stock Brokers Association (PSBA), State Bank of Pakistan (SBP), Pakistan Banks Association (PBA), Mutual Fund Association of Pakistan (MUFAP), securities brokers, asset management companies, clearing members and settling banks.

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With the shift to T+1, Pakistan joins markets such as the United States, Canada, Mexico, Argentina, Jamaica and China, which have already adopted shorter settlement cycles. European markets, including the UK and Switzerland, are expected to follow suit by 2027.

Market participants say the shorter settlement cycle will allow quicker access to funds and securities, improve liquidity and significantly reduce settlement and counterparty risk by shortening exposure periods.

The reform is also expected to enhance operational efficiency and boost investor confidence, particularly among institutional and foreign investors.

SECP Chairman Dr Kabir Ahmed Sidhu praised the PSX, CDC and NCCPL for the successful implementation of the new settlement system, noting that the reform brings Pakistan’s capital market closer to modern global standards.

He said the move would help accelerate trade settlement, reduce market and counterparty risks, enhance liquidity and strengthen investor confidence, while aligning the country’s capital market framework with evolving international practices.

The transition forms part of SECP’s broader efforts to modernise Pakistan’s capital markets, reduce systemic risks and strengthen investor protection. PSX, NCCPL and CDC also acknowledged the collective efforts of all stakeholders involved in ensuring the smooth rollout of the T+1 settlement cycle.