The Pakistan Stock Exchange (PSX) has launched a dedicated Shariah-Compliant Trading Counter, establishing an end-to-end investment ecosystem for retail and institutional investors seeking opportunities in accordance with Islamic financial principles. The initiative follows the approval of the Shariah Trading Counter Regulations by the Securities and Exchange Commission of Pakistan (SECP) and introduces a specialised trading environment supported by regulatory oversight and system-based compliance controls. The launch represents an expansion of Pakistan’s Islamic capital market infrastructure, allowing investors to participate in eligible securities through a framework designed to exclude interest-based financial products and other investments that do not meet Shariah requirements.
The launch was formally marked through a gong ceremony attended by representatives of several major financial and regulatory institutions, including the SECP, State Bank of Pakistan (SBP), Central Depository Company (CDC), National Clearing Company of Pakistan Limited (NCCPL) and Pakistan Stock Brokers Association (PSBA). Shariah scholars and representatives of participating brokerage houses also attended the ceremony, highlighting the involvement of market institutions and Islamic finance experts in developing the new trading facility. According to the announcement, 39 brokerage firms have already been onboarded to provide Shariah-compliant trading services through their Islamic windows, while two additional brokerage houses hold licences to operate as fully Shariah-compliant brokers.
The new counter will function under procedures and regulations established by the PSX and approved by the SECP. Its trading activities are restricted to securities and financial instruments that satisfy Islamic investment requirements, including Shariah-compliant equities, Government Ijarah Sukuk and Corporate Sukuk. Securities that do not meet the required Shariah standards are excluded from the dedicated trading environment. These restrictions are intended to provide investors with a structured platform where eligible investment opportunities can be accessed without the involvement of prohibited financial activities. The framework also introduces operational safeguards to ensure that trading remains within the boundaries established by the approved regulations.
An important feature of the initiative is the exclusion of conventional interest-based leverage facilities. Products such as the Margin Trading System (MTS) will not be available through the Shariah-Compliant Trading Counter. Instead, investors will have access to Murabaha Share Financing (MSF), which serves as the Islamic financing alternative for eligible share transactions. Short selling and derivatives trading are also prohibited under the new arrangement. These restrictions distinguish the counter from conventional trading facilities by limiting investment activities to approved instruments and financing structures. Additionally, investors will have the option to divest holdings that are identified as non-compliant, enabling them to take steps towards purifying their investment portfolios in accordance with Shariah principles.
To improve transparency and simplify access to eligible investment information, the PSX has introduced a dedicated Shariah Portal through its Data Portal. The facility provides information on stocks and Sukuk that qualify for Shariah-compliant investment, allowing market participants to identify eligible securities before making investment decisions. Investors can also open trading accounts through the new framework, including Sahulat Accounts, by completing a Shariah-compliant Customer Relationship and Risk Disclosure Document. This arrangement is intended to make the process more accessible to individuals who may be interested in entering the stock market but require an investment structure aligned with Islamic financial requirements.
PSX Managing Director and Chief Executive Officer Farrukh H. Sabzwari said the dedicated trading environment, supported by system-based compliance controls, would help improve investor confidence and expand access to Islamic investment opportunities. He also highlighted the importance of strengthening Pakistan’s Islamic capital market ecosystem through specialised trading infrastructure. According to Sabzwari, investor accounts at the exchange have crossed 650,000, with Millennials and Generation Z contributing significantly to the growth in market participation. He expressed expectations that the new counter would attract additional investors from Pakistan’s predominantly Muslim population by providing a dedicated facility for participation in Shariah-compliant securities.
SECP Commissioner Imtiaz Haider also highlighted the potential of the initiative, noting that a considerable proportion of listed equities and mutual fund assets in Pakistan already meets Shariah-compliant requirements. He said the new trading facility would help broaden participation in the capital market, create additional opportunities for investors and brokerage firms, and strengthen confidence in Islamic investment products. The initiative could also encourage more brokerage houses to develop specialised services for investors seeking Islamic financial solutions, contributing to greater competition and wider availability of compliant investment options.
SECP Head of Islamic Finance Dr Tariq Naseem outlined several areas that could support the next phase of development in Pakistan’s Islamic capital market. These include expanding digital retail Sukuk offerings, introducing additional Shariah-compliant instruments for liquidity and risk management, and strengthening the legislative framework governing Islamic financial services. Such measures are expected to support the development of a broader range of investment products and improve the infrastructure available to financial institutions and individual investors.
The launch of the Shariah-Compliant Trading Counter adds another specialised facility to Pakistan’s capital market as financial regulators and market institutions continue working to expand Islamic finance. By combining eligible equities, Sukuk, alternative financing arrangements and dedicated compliance procedures, the PSX aims to provide investors with a more accessible route into the stock market. The initiative also creates opportunities for brokerage firms to expand their Islamic investment services while supporting the wider development of Pakistan’s Shariah-compliant financial ecosystem.
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