Karachi, December 4, 2024 — The Securities and Exchange Commission of Pakistan (SECP) Chairman, Akif Saeed, has emphasized the country’s growing prominence in Shariah-compliant financing, stating that Pakistan’s regulatory compliance in capital markets aligns with global standards. This positions the country as a potential leader in Islamic finance.
Addressing a press conference ahead of the second international Islamic Capital Market conference scheduled for December 12 in Karachi, Saeed revealed that an internal assessment indicated a 90% compliance rate at Pakistan’s capital markets, including the Pakistan Stock Exchange (PSX), in line with global benchmarks. This marks significant progress from earlier independent assessments in 2015 and 2018, which reported 86% compliance with the International Organisation of Securities Commissions (IOSCO) principles.
Islamic Financial Services Act on the Horizon
SECP’s Head of Islamic Finance, Tariq Naseem, disclosed plans to evaluate compliance with the Islamic Financial Services Board’s (IFSB) principles for Islamic capital markets. “This step will further elevate Pakistan’s stature in the global Islamic finance landscape,” Naseem remarked.
The SECP’s regulated sectors in Islamic finance have already achieved notable milestones. Currently, 55% of PSX’s market capitalization, 48% of mutual fund assets, 65% of voluntary pension fund assets, and 95% of real estate investment trusts (REITs) are Shariah-compliant.
Strong Demand for Islamic Financial Instruments
Saeed highlighted the substantial demand for Islamic financing, with unlisted firms raising Rs500 billion through Sukuk (Islamic bonds) since 2022. Additionally, the government secured Rs1.5 trillion in financing through sovereign Sukuks listed on the PSX over the past year.
To address challenges in the Shariah-compliant secondary bond market, the SECP is collaborating with the State Bank of Pakistan (SBP) and the Pakistan Banks’ Association (PBA). Planned measures aim to enhance market transparency, confidentiality, and retail investor participation.
Key Sectors Driving Demand
The agriculture, small and medium enterprises (SMEs), and housing sectors are identified as primary drivers of demand for Shariah-compliant financing. Pakistan is working towards fully transforming its economy to align with Islamic financial principles by 2028. Faisal Bank has already completed its transition to Islamic banking, with other banks and two asset management companies on a similar path.
Upcoming Islamic Capital Market Conference 2024
The SECP is hosting the second international Islamic Capital Market conference in collaboration with the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the Islamic Development Bank Institute (IsDBI). The event, slated for December 12 in Karachi, will feature over 20 renowned international experts and policymakers from countries including Bahrain, Saudi Arabia, Nigeria, Malaysia, Türkiye, Oman, Iran, and the United Kingdom.
“This conference will further solidify Pakistan’s position as a key player in the global Islamic finance arena,” said Saeed.
Looking Ahead
With accelerating advancements in Islamic finance and robust regulatory support, Pakistan is poised to lead the global shift towards Shariah-compliant financial systems, fostering inclusive and ethical economic growth.
