SECP plans to introduce Shariacompliant brokerage houses

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) is planning to introduce Sharia-compliant brokerage houses for providing Shariah-compliant brokerage services in the securities market.

The SECP Friday published a concept paper aimed at enabling Shariah-compliant brokerage services in the securities market through an optimal organizational and operational model.

Keeping in view the strategic importance of the brokerage industry, the Commission is considering options to pave the way for the introduction of Sharia-compliant brokerage houses.

Therefore, the Commission, to energize this critical area, is considering several possibilities to adopt an optimal Shariah-compliant brokerage services model by new entrants and existing brokerages. While on-boarding of new entrants may be a relatively simpler process, the transition of existing players to establish Shariah compliance window operations or subsidiaries may require additional reforms in the existing framework.

The concept paper presents several options available for the provision of Shariah-compliant brokerage services, including the opening of an Islamic brokerage subsidiary having the license of either a Trading-Only/Online-Only or Trading and Self-Clearing category; or through the establishment of a dedicated Islamic window. A critical analysis of the available options and a summary of international best practices have also been included.

The SECP released guidelines last year for conventional financial institutions to offer Shariah-compliant services. A separate set of guidelines was issued enabling the general public to invest in PSX while adhering to Shariah principles. The SECP is dedicated to fostering Islamic capital markets for sustainable market growth, long-term economic investment, and financial inclusion.

The paper invites the stakeholders to submit their feedback on the available options for offering Islamic brokerage services.

Copyright Business Recorder, 2024