The Securities and Exchange Commission of Pakistan (SECP) has authorized five securities firms to operate Islamic brokerage windows, enabling investors to trade Shariah-compliant shares, sukuk, and exchange-traded funds (ETFs) via specialized platforms. This initiative aligns with Pakistan’s broader strategy to enhance Islamic finance in the country.
In a significant development, this move follows the Federal Shariat Court’s 2022 directive for the government to phase out interest-based banking and financial systems by 2027, declaring interest, or riba, as un-Islamic. The decision underscores Pakistan’s commitment to restructuring its financial sector in accordance with Islamic principles.
Pakistan’s Islamic finance sector has witnessed considerable growth recently. Official figures reveal that Islamic banking now represents approximately one-quarter of the nation’s total banking assets and deposits. Meanwhile, over half of the equities listed on the Pakistan Stock Exchange meet Shariah-compliance standards.
The SECP identified the approved firms as Insight Securities (Private) Limited, Optimus Capital Management (Private) Limited, Value Stocks and Commodities (Private) Limited, Intermarket Securities Limited, and Dawsons Securities (Private) Limited. Through these Islamic brokerage windows, investors will gain direct access to Shariah-compliant stocks, sukuk, and Islamic ETFs.
The regulator emphasized that funds deposited in these Islamic brokerage accounts will be exclusively allocated to Shariah-compliant investments. Additionally, the brokerage windows will function using separate Islamic banking accounts and dedicated trading systems, ensuring that all transactions involve only Shariah-compliant securities.
Meanwhile, in December 2023, the SECP instructed the Pakistan Stock Exchange to encourage Shariah-compliant brokerage services as part of its efforts to align capital markets with the Federal Shariat Court’s mandate. Data from the SECP indicates that more than 51 percent of listed equities in Pakistan qualify as Shariah-compliant, accounting for roughly 60 percent of the total market capitalization and nearly 80 percent of daily trading volume.
Furthermore, in 2024, the SECP approved amendments to brokerage regulations and granted a license to ZLK Islamic Financial Services, marking the establishment of Pakistan’s first fully Shariah-compliant brokerage house. This series of regulatory actions highlights the country’s ongoing commitment to expanding Islamic finance offerings.
