SECP approves independent Shariah screening for Pakistan’s listed securities

The Securities and Exchange Commission of Pakistan (SECP) has approved the country’s first independent Shariah screening mechanism for securities listed on the Pakistan Stock Exchange, allowing a private firm to conduct compliance assessments for investors and market participants.

The approval has been granted to Al-Hilal Shariah Advisors Pvt Limited, enabling the company to independently screen listed securities and publish Shariah-compliant lists based on its approved methodology.

According to SECP, the move introduces an alternative regulatory pathway under the Shariah Governance Regulations 2023. It is intended to broaden participation in Shariah-compliant investment services while encouraging competition in the Islamic capital markets segment.

Previously, Shariah compliance screening for listed companies was carried out by the Pakistan Stock Exchange in partnership with Meezan Bank Limited and Al Meezan Investments.

As of December 31, 2025, 308 out of 535 securities listed on the Pakistan Stock Exchange are classified as Shariah-compliant, representing 63% of the market’s total capitalization. These companies account for Rs12,373 billion of the exchange’s total market value of Rs19,679 billion, according to SECP.

Under the new approval, Al-Hilal Shariah Advisors will apply a screening methodology based on the latest available financial information and predefined criteria to include or exclude securities from the Shariah-compliant list.

The regulator said the initiative could also support the development of new Islamic equity indices within Pakistan’s capital market. However, any such index will require coordination with the Pakistan Stock Exchange before it can be launched.

SECP added that Shariah-compliant securities lists will now be updated and published quarterly, replacing the previous six-month screening cycle used for compliance reviews.