The Murabaha Share Financing (MSF) system, a new product to finance the share purchase requirements in Sharia compliant companies, will be implemented on Pakistan Stock Exchange (PSX) from today (Monday). The Securities and Exchange Commission of Pakistan (SECP) had accorded regulatory approval with respect to MSF and had directed National Clearing Company of Pakistan Limited (NCCPL) to implement MSF System effective from September 02, 2019.
This product is after a lot of debate and brain storming within the financial circles and different Sharia Advisors from not only SECP Sharia Advisory Board, but also from Islamic Banks and Modarabas, Adil Ghaffar, former general secretary of PSX Brokers Association said. He said the MSF was in pipeline for the last six years but was put on fast track by Aamir Khan, chairman SECP, when he assumed charge as Commissioner Specialized Companies.
Through this newly introduced Islamic financing product, SECP has achieved various objectives, such as utilisation of huge funds available with Islamic banks and financial institutions including modarabas; arrangement of liquidity for stock market; investor's will now be able to arrange it directly from the banks; risk mitigation of stock brokers default and off balance sheet financing, arranged internally. Murabaha is primarily a sale transaction which will be used to finance the purchase requirements of customers in a Shariah compliant manner. The introduction of MSF facility will benefit the investors who are willing to avail Shariah compliant products for purchase of securities and will facilitates the financiers in extending credit facility in a Shariah compliant manner. The market participants were welcoming MSF saying this new product will fulfil their requirements of financing in purchasing of shares of 240 Sharia compliant listed companies. They are optimistic that this financing facility will support increasing trading activities at the stock market.