Pakistan stock exchange tightens rules for Shariah compliant brokers under new regulatory amendments

PAKISTAN: Pakistan Stock Exchange (PSX) has introduced a set of regulatory amendments governing Shariah compliant brokerage services, marking a significant step in strengthening the country’s Islamic capital market framework. The changes, approved by the Securities and Exchange Commission of Pakistan (SECP), have taken effect from the 24^th November 2025 and are aimed at improving governance, operational clarity and investor protection within the Shariah compliant brokerage segment.

Under the revised Chapter 4 of PSX Regulations, a new formal definition of a ‘Shariah Compliant Securities Broker’ has been introduced. The amendments also allow the chief executive officer of a conventional securities broker to serve as a nominee director in a wholly owned Shariah compliant subsidiary, providing greater operational flexibility for brokerage firms seeking to expand into Islamic services. Shariah compliant brokers are additionally required to fully comply with all applicable laws, regulations and SECP directives as updated from time to time.

Further aligning operational procedures with Islamic finance requirements, PSX has mandated that Shariah compliant securities brokers adopt separate customer relationship forms and Sahulat account opening forms, which have been independently notified on the exchange’s website.

In parallel, PSX has also introduced new transparency requirements for all securities brokers under its back-office regulations. Brokers are now required to prominently display the name of their software vendor on their official websites and to update this information whenever changes occur. This amendment is intended to enhance operational transparency and strengthen regulatory oversight across the brokerage sector.

Market participants have been advised to ensure full compliance with the updated regulatory framework, which is now available under the legal framework section of the PSX website. The amendments reflect Pakistan’s broader push to deepen Islamic finance infrastructure and enhance governance standards across its capital markets.

Last month, IFN reported that the SECP approved a broader set of amendments to PSX regulations aimed at enhancing market transparency, investor protection and the development of the country’s Shariah compliant capital market. These include mandatory public disclosure by PSX of disciplinary actions against listed firms, expanded Shariah-related financial disclosures by companies for index screening and the development of dedicated KMI Shariah indices.

Pakistan's Shariah compliant brokerages include ZLK Islamic Financial Services, Arif Habib Corporation, Taurus Securities and Ismail Iqbal Securities.

Pakistan plans to fully transition to Islamic banking by the 31^st December 2027 as mandated by the Federal Shariat Court in 2022.