The Shariah Advisory Board (SAB) has granted approval for the introduction of the Shariah-compliant trading counter at Pakistan Stock Exchange Limited (PSX). This has been highlighted in the new annual report (2018) of the Securities and Exchange Commission of Pakistan (SECP).
The SECP said that a proposal for establishment of a Shariah-compliant trading counter at PSX has been presented by IFD to the SECP''s Shariah Advisory Board. The Shariah Advisory Board has granted, in principle, approval for the introduction of the counter and asked that relevant regulatory changes to the regulations of PSX, National Clearing Company of Pakistan Limited (NCCPL) and Central Depository Company (CDC) may be done and presented to the board for its review.
The share of Shariah-compliant assets of the NBFI industry is steadily rising, Shariah-compliant assets account for 31.80% of the total assets of the NBFI industry as on June 30, 2018. The Shariah-compliant mutual funds
registered phenomenal growth and the share of Shariah-compliant funds reached 40% of the assets under management (AUM) of the mutual fund industry as of June 30, 2018.
For the pilot project of commodity Murabaha transactions, the SECP approved the Pakistan Mercantile Exchange (PMEX) Shariah-compliant Commodity Murabaha Regulations. The SECP and State Bank of Pakistan (SBP) granted approval for a three-month pilot phase for execution of commodity Murabaha transactions. The Shariah compliance status of the transactions executed on the exchange were monitored during the pilot phase and final approval of the product is under consideration.
The SECP''s Shariah Advisory Board has granted, in principle, approval for Murabaha share financing product at PSX and decided that NCCPL team will coordinate with the Shariah advisors to bring about necessary improvements to the process flow and agreements. The revised agreements and process flow will be presented to the Shariah Advisory Board for its review and approval.
An obstacle-free regulatory regime that provides level playing field is a prerequisite for sustainable development and penetration of the Islamic corporate sector and capital markets. The SECP is providing its regulatory support to spur growth of the Islamic finance industry and is focused on scaling up Islamic finance regulations to provide an enabling regulatory environment to stakeholders in the sectors within the SECP''s regulatory ambit, the SECP added.
The SECP, under the enabling provisions of the Companies Act, issued Draft Shariah Governance Regulations, 2018 (Shariah governance framework) for the governance of Shariah-compliant companies, Shariah-compliant securities and Islamic financial institutions. The proposed regulations encompass various elements of Shariah governance such as Shariah compliance, internal and external Shariah audit, Shariah screening, Shariah-related disclosures and explicate the responsibilities of Shariah advisors. It also provides a certification mechanism for Shariah-compliant companies and securities.
The Shariah governance framework of the SECP was appreciated locally as well as internationally.