ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has directed Shariah-compliant institutional investors to formulate an internal policy to route securities trading transactions through Shariah-compliant securities brokers.
The directive aligns with the constitutional mandate to eliminate Riba from the financial sector gradually.
The SECP has directed its relevant licensed entities to adopt concrete measures for facilitating the growth of Shariah-compliant intermediary services.
Shariah-Compliant Intermediaries: SECP issues consultation paper
Shariah-compliant institutional investors under the SECP’s regulatory domain are now mandated to route their securities trading transactions through Shariah-compliant securities brokers in a phased manner. This requirement applies to Takaful operators, window Takaful operators, and other Shariah-compliant licensed entities, namely non-banking finance companies, collective investment schemes, voluntary pension schemes, modarabas, Modaraba management companies, private funds, and securities brokers.
In the first phase, these institutional investors must formulate an internal policy by December 31, 2025. They are required to report their progress, along with any implementation challenges, on a quarterly basis starting March 31, 2026, and must include at least one Shariah-compliant securities broker in their approved panel by June 30, 2026.
In the second phase, which runs from July 1, 2026, to June 30, 2027, these investors must route at least 20 percent of their securities trading business through Shariah-compliant securities broker(s). Following the conclusion of the second phase, the Commission will determine the way forward based on the progress achieved, both entity-wise and sector-wise.
Copyright Business Recorder, 2025
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