Islamabad, September 19, 2024 – The Securities and Exchange Commission of Pakistan (SECP) has established the Islamic Capital Market Development Committee (ICMDC) with a mandate to enhance the growth and development of Islamic finance in the country.
This newly constituted committee will operate for a period of three years, aiming to promote innovation, inclusivity, and sustainability in Pakistan’s Islamic capital market while adhering to Shariah principles.
In its official notification, the SECP outlined the committee’s primary objective of fostering the Islamic capital market’s development and ensuring that all innovations within this space remain Shariah-compliant. The committee’s role will include encouraging collaboration between market participants and other stakeholders, facilitating the introduction of new financial products, and recommending regulatory improvements.
Dr. Irum Saba, Associate Professor at the Department of Finance, Institute of Business Administration (IBA), Karachi, has been appointed as the chairperson of the committee. Tariq Naseem, Head of the Islamic Finance Department and Registrar Modaraba at SECP Islamabad, will serve as the convener. Several other industry experts have also been nominated to the committee, further bolstering its capacity to steer Islamic finance forward.
Terms of Reference for ICMDC
The committee’s terms of reference are focused on enhancing Pakistan’s Islamic capital market, and they include the following key goals:
1. Stakeholder Collaboration: The ICMDC will foster dialogue and collaboration with key stakeholders such as financial institutions, market participants, Shariah scholars, and industry experts. The aim is to identify challenges within the Islamic finance sector and propose effective solutions for sustainable growth.
2. Innovation in Islamic Financial Products: A major focus will be facilitating the introduction of new Shariah-compliant financial products and services. By working closely with market participants, the committee seeks to expand the range of offerings available within Pakistan’s capital markets.
3. Market Integration: The committee will explore ways to integrate Islamic capital market participants, ensuring smooth cooperation in the development and distribution of innovative financial products. It will also identify and resolve any bottlenecks hindering market growth.
4. Regulatory Review: One of the core objectives is to review and recommend improvements to the legal and regulatory framework for Islamic finance in Pakistan. The committee will ensure that these enhancements are in line with Shariah principles and international best practices, while also implementing the Federal Shariah Court’s judgments.
5. Research and Development: The committee will encourage research on market trends, financial instruments, and fintech solutions compatible with Islamic finance principles.
6. Global Standards: Identifying and recommending relevant global standards for Islamic finance services is another key task, ensuring that Pakistan’s Islamic finance offerings align with international benchmarks.
7. Education and Awareness: Promoting education, awareness, and capacity building in the Islamic finance sector through seminars, workshops, and training programs will also be a priority. Collaboration with academic institutions and international Islamic finance organizations is encouraged.
The SECP has empowered the chairperson of the committee to form subcommittees or working groups as needed. These groups can include industry participants to address specific issues. The committee will submit its findings and recommendations to the SECP through its Islamic Finance Department.
With the creation of the ICMDC, the SECP hopes to propel the Islamic capital market toward greater innovation and integration, thereby boosting its role in Pakistan’s financial sector.
