Shariah-Compliant Intermediaries: SECP issues consultation paper

ISLAMABAD: In order to facilitate Roshan Digital Account (RDA) clients, the Securities and Exchange Commission of Pakistan (SECP) has proposed creation of a separate category of Shariah-compliant intermediaries on the websites/mobile apps of Islamic banks.

In this regard, the SECP Monday issued a consultation paper proposing measures to promote Shariah-compliant intermediaries in the capital market. The paper is in line with the broader objective of SECP to facilitate the provision of Shariah-compliant services within its regulated sectors.

The SECP has also proposed that Shariah-compliant institutional investors under regulatory domain of SECP (such as mutual funds, pension funds, private funds, Takaful operators, window Takaful operators, modarabas, Modaraba Management Companies, NBFCs, etc.) be required to route more of their business through Shariah-compliant brokers in a phased manner. This measure shall not only promote Shariah-compliant brokers but also provide the institutional investors access to greater expertise in Shariah-compliant investments.

The paper proposes a phase-wise approach for Shariah-compliant institutional investors to route their business through Shariah-compliant brokers based on a plan to be prepared by their respective boards of directors. In addition, the paper encourages Islamic financial institutions, including providers of Islamic window services, to utilize Shariah-compliant intermediaries for takaful and investment purposes in situations where they are not obligated to do so.

Other proposed measures include creating a specific category for Shariah-compliant intermediaries for greater visibility on the Centralized Gateway Portal and a dedicated list of Shariah-compliant asset management companies on EMLAAK Financials.

Islamic financial institutions, including Islamic window operations, may be encouraged to utilize Shariah-compliant institutions and intermediaries excluding securities brokers, in instances where they are not obligated to do so. This may include using Takaful services for their insurance needs and Shariah-compliant AMCs for investment purposes, SECP proposals added.

Copyright Business Recorder, 2025