��������

KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has asked the country’s stock exchange to promote Shariah-compliant brokerage services in equity trading, the regulator’s spokesperson Affan Haider said on Wednesday, saying the move was expected to help Pakistan eliminate interest from its economy by 2027.

Pakistan’s Federal Shariat Court (FSC) directed the government in April 2022 to eliminate interest by 2027, maintaining that Islam prohibited it in all its forms and manifestations. The FSC determines whether Pakistani laws comply with Islamic law or not.

Apex regulators from the SECP have asked Islamic institutional investors, including Takaful (insurance) operators, mutual funds and others, to route a minimum of 20 percent of their business of trading securities through Shariah-compliant brokers by June 2027.

“(The) PSX will work in close coordination with market participants to develop a Shariah-compliant trading mechanism and undertake market awareness initiatives to promote understanding and adoption of Shariah-compliant brokerage services,” Haider said.

He added the SECP had sent notices recently to the Pakistan Stock Exchange (PSX), the Central Depositary Company (CDC) and Shariah-compliant institutional investors in this regard.

According to SECP data, more than 51 percent of Pakistan’s listed equity securities are Shariah-compliant, representing about 60 percent of the country’s total market capitalization. These Islamic securities consistently make up around 80 percent of the PSX’s daily trading volume.

“This [move] demonstrates a robust market foundation and clear investor demand for dedicated trading and brokerage services, tailored to Shariah-conscious investors,” Haider said.

Last week, the SECP directed the PSX and CDC to enhance or incentivize the offering of Shariah-compliant intermediary services in Pakistan’s capital market.

“The core objective of this initiative is to facilitate the gradual transformation of the financial system with a view to establishing a comprehensive and inclusive Islamic finance ecosystem,” the SECP spokesperson explained.

Haider said each SECP-regulated Islamic institutional investor would be required to include at least one Shariah-compliant broker in its approved panel of brokers.

The SECP will encourage conventional brokers to establish Shariah-compliant brokerage services either by forming subsidiaries or through window operations.

‘POSITIVE STEP’

Industry stakeholders welcomed the move as a “step forward” for the government in implementing the FSC’s deadline.

“This is a positive step because, if we let’s say have to convert our financial system into Islamic financing, we would also need to convert our capital market,” Ahmed Ali Siddiqui, head of the Shariah compliance department at Meezan Bank, said.

“The Sukuk and share market must be converted too,” he added.

He said establishing dedicated brokerage houses would attract investors who want to avoid interest-based share trading.

“The biggest challenge our stocks market is facing right now is that it lacks Shariah credibility in the eyes of many investors,” Siddiqui said. “We don’t have Islamic brokers at our stocks market.”

He said Zahid Latif Khan Securities (Private) Limited was presently the only licensed Shariah-complaint brokerage firm. However, he said regulators would now start issuing more such licenses given the expected increase in demand.

“Many stockbrokers would start opening their Islamic windows as some of the big brokers have already started thinking about opening Islamic windows to start with the conversion process,” Siddiqui explained.

Muhammad Shoaib, chief executive officer at the Shariah-compliant Lucky Investments Limited company, said the SECP was trying to lure PSX, CDC and stockbrokers toward the Islamic financial system.

“However, a major component of this journey should be to first make the country’s banking system fully Shariah-compliant, which would make it easier for listed companies, brokers and all products of the stock exchange,” Shoaib said, whose company is a subsidiary of YB (Lucky) Group. It is managing Rs88 billion ($312 million) worth of assets.

Shoaib plans to more than double this amount to Rs200 billion ($710 million) by the end of 2026.

Lucky Investments raised the Rs50 billion ($178 million) funding through an initial public offering from the PSX in April, reflecting a growing appetite for Islamic financing in the country.

ISLAMABAD: Pakistan has assumed the chair of the Regional Anti-Terrorist Structure (RATS) body of the Shanghai Cooperation Organization,(SCO) the foreign office announced on Wednesday, saying the role would allow Islamabad to foster regional cooperation against “terrorism.”

RATS SCO, founded in 2002 and headquartered in Tashkent, Uzbekistan, is a permanent organ of the SCO alliance which serves to promote cooperation among members states against “terrorism,” separatism, and extremism.

The foreign office said Islamabad assuming the counterterror body’s chair was a reflection of the confidence that SCO member states have in Pakistan’s efforts and contributions toward regional peace and security.

“In its capacity as the chair of SCO-RATS, Pakistan will work toward fostering regional cooperation against terrorism, in line with shared priorities, guided by the Shanghai Spirit of mutual trust, equality and shared responsibility,” the foreign office said.

It said as the body’s chair, Pakistan will host events on key domains such as cyber counterterrorism, information operations, border security, countering terrorist financing, and capacity-building to deepen collaboration.

Pakistan has frequently said it has lost 90,000 lives due to scores of militant attacks over the past couple of decades. Prime Minister Shehbaz Sharif said earlier this month Islamabad has suffered economic losses worth $152 billion due to “terrorism.”

“As a frontline state in combating terrorism, Pakistan continues to make unparalleled sacrifices to ensure safety and security not only of its own people but the region and beyond,” the statement said.

“Pakistan will continue to work with international and regional partners to advance collective efforts against terrorism, in line with the principles of the SCO, international law and the United Nations Charter.”

The development takes place as Pakistan battles twin insurgencies in its northwestern Khyber Pakhtunkhwa (KP) and southwestern Balochistan provinces. Islamabad blames the Afghan government for not taking action against the Tehreek-e-Taliban Pakistan (TTP) militants, alleging frequently that they operate from Afghanistan’s territory. Kabul denies the allegations.

Pakistan also accuses India of arming and funding militant groups in Balochistan, where separatist militants demand independence from the state. New Delhi rejects the allegations and accuses Islamabad of fueling insurgency in the part of disputed Kashmir it administers.