Pakistan’s capital market has formally transitioned to a T+1 settlement cycle, marking a structural reform aimed at improving efficiency, mitigating risk exposure, and aligning the country’s trading framework with international standards. Effective February 9, 2026, all eligible trades executed at the Pakistan Stock Exchange (PSX) are now settled on a Trade plus one (T+1) basis, replacing the previous T+2 settlement cycle, according to an official press release issued on February 10.
The implementation has been carried out under the guidance of the Securities and Exchange Commission of Pakistan (SECP), with coordinated efforts across key market infrastructure institutions and stakeholders. These include the Pakistan Stock Exchange (PSX), National Clearing Company of Pakistan Limited (NCCPL), Central Depository Company (CDC), Pakistan Stock Brokers Association (PSBA), State Bank of Pakistan (SBP), Pakistan Banks Association (PBA), Mutual Fund Association of Pakistan (MUFAP), securities brokers, custodian clearing members, asset management companies, settling banks, E-Clear, and other non-broker clearing members.
By shifting to T+1, Pakistan joins markets such as the United States, Canada, Mexico, Argentina, Jamaica, and China that have already adopted shorter settlement cycles. Several European markets, including the UK and Switzerland, are expected to implement similar transitions by 2027. The early adoption positions Pakistan ahead of a number of advanced jurisdictions, reflecting a policy direction centered on modernization and investor safeguards.
A shorter settlement cycle reduces the time between trade execution and final settlement of securities and funds. Under the new framework, transactions are completed one business day after the trade date, limiting the duration of counterparty exposure and reducing settlement risk. This structural change lowers the probability of default between trading parties while also curbing systemic vulnerabilities within the clearing and settlement ecosystem.
The reform is expected to deliver multiple operational benefits. Faster access to funds and securities enhances liquidity across the market, enabling investors to redeploy capital more efficiently. Reduced exposure periods contribute to improved risk management for brokers, clearing members, and financial institutions. In addition, quicker trade finalization strengthens operational efficiency and enhances overall market resilience.
Market authorities anticipate that the T+1 cycle will reinforce investor confidence, particularly among institutional and foreign participants who assess settlement frameworks as part of their risk evaluation. Alignment with globally recognized standards is also expected to improve Pakistan’s market profile in cross-border investment considerations.
Dr. Kabir Ahmed Sidhu, Chairman of SECP, acknowledged the collaborative efforts of PSX, CDC, and NCCPL in executing the transition. He stated that the reform brings Pakistan’s capital market in line with contemporary jurisdictions by accelerating settlement processes, reducing counterparty and market risks, and enhancing liquidity dynamics. He further emphasized that the adoption of T+1 strengthens investor confidence and reflects alignment with evolving international practices.
The milestone forms part of SECP’s broader policy agenda aimed at modernizing capital market infrastructure, lowering systemic risk, and reinforcing investor protection mechanisms. PSX, NCCPL, and CDC collectively congratulated participating stakeholders for enabling a coordinated transition within the established timeline.
With the T+1 framework now operational, Pakistan’s capital market enters a new phase of post-trade efficiency, supported by regulatory oversight and integrated clearing systems designed to sustain transparency and stability in an increasingly interconnected financial environment.
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