The Shariah Advisory Board (SAB) of the SECP in its ninth meeting reviewed the proposal of Shariah-compliant trading counter submitted by Pakistan Stock Exchange. The main distinctive feature of the proposal is to convert the T+2 settlement into T+0 settlement mechanism in the Shariah-compliant securities listed on the PSX.
The proposal shall help those who invest in the Shariah-compliant securities by reducing price risk associated with the T+2 settlement.
Shariah principles require that shares cannot be sold until the delivery is tendered into the buyer’s account. In the proposed concept, this obstacle is addressed and the T+0 settlement mechanism is being introduced for Shariah-sensitive investors.
The Shariah advisory board has, in principle, granted approval of the proposed Shariah-compliant trading counter at PSX subject to the proper translation of the mechanism of real-time/same-day settlement in the regulations of the PSX. The SAB recommended that the relevant regulatory changes be made in the regulations of PSX, NCCPL, and CDC and presented for final approval of the SAB.
The Shariah Advisory Board also reviewed and granted approval of three AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) Shariah standards, i.e. Shariah Standard No 17 – Investment Sukuk, Shariah Standard No 18 – Possession (Qabd) and Shariah Standard No 23 – Agency and the Act of an un-commissioned agent (Fodooli) which will be presented to the Commission for its approval for notification.
The Shariah Advisory Board lauded the SECP’s initiatives for the development of the Islamic capital market and transformation from an interest-based to an interest-free economy.