In a strategic move to promote Islamic capital markets, the Securities and Exchange Commission of Pakistan (SECP) on Friday released a concept paper outlining a plan to introduce Sharia-compliant brokerage services in the securities market.
The paper proposes an optimal organizational and operational model to facilitate the seamless integration of such services.
The concept paper presents various options for providing brokerage services in accordance with Shariah law.
One approach involves establishing an Islamic brokerage subsidiary that is licensed either for trading only, for online trading only, or for trading and self-clearing.
Alternatively, this document proposes the creation of a dedicated Islamic window within existing brokerage structures, as highlighted in the press release.
In particular, the document contains a thorough critical analysis of the options available, together with a brief summary of international best practices in Sharia-compliant financial services.
The initiative builds on the SECP’s guidelines from the previous year, which called on conventional financial institutions to incorporate Shariah-compliant services.
Last year, the SECP issued a separate set of guidelines to allow the general public to engage in investments on the Pakistan Stock Exchange (PSX) while adhering to Shariah principles.
As highlighted in the press release, the regulator remains steadfast in its commitment to cultivate Islamic capital markets to achieve sustainable market growth, long-term economic investment and better financial inclusion.
The SECP is now seeking input from stakeholders and inviting them to provide feedback on the various options outlined in the concept paper for implementing Shariah-compliant brokerage services.
This collaborative approach underlines the regulator’s commitment to inclusive decision-making and ensuring a strong framework for the future of Islamic finance in the securities market.
