Pakistan’s capital market is set to enter a faster and more efficient phase as the Pakistan Stock Exchange transitions from a T+2 to a T+1 settlement cycle, effective February 9, 2026. The move marks a major reform aimed at aligning the country’s securities market with international best practices.
The transition is being led by the Securities and Exchange Commission of Pakistan and will shorten the time required to complete securities transactions. Under the new framework, trades executed on a given day will be settled within one business day, replacing the existing two-day settlement cycle.
Market participants view the development as a significant step toward improving operational efficiency, strengthening risk management, and boosting overall investor confidence. Faster settlement timelines are expected to reduce capital lock-in and enhance trading flexibility across the market.
With the implementation of T+1, shares purchased on a trading day will be credited to investors’ accounts on the next business day, while sellers will receive sale proceeds within 24 hours of trade execution. Previously, the two-day settlement process often delayed fund availability and limited the speed at which investors could reinvest capital.
Industry experts believe the reduced settlement window will significantly lower counterparty risk by minimizing the exposure period between trade execution and settlement. The change is also expected to improve market liquidity, as investors will be able to redeploy funds more quickly and manage portfolios with greater efficiency.
The shift to T+1 is anticipated to enhance the appeal of the Pakistan Stock Exchange, particularly for foreign institutional investors who prefer markets with shorter settlement cycles. By adopting this model, Pakistan aligns itself with major global markets such as the United States and India, both of which have already implemented T+1 settlement systems.
The successful rollout of the new settlement cycle is the result of coordinated efforts among key market institutions, including the National Clearing Company of Pakistan Limited and the Central Depository Company. Industry stakeholders such as the Mutual Funds Association of Pakistan, the Pakistan Stock Brokers Association, and the Pakistan Banks Association have also played a central role in facilitating the transition.
Regulators and market participants consider the reform a key milestone in the modernization of Pakistan’s capital markets. The move underscores the country’s commitment to developing a more efficient, transparent, and globally competitive financial ecosystem.
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