Pakistan allows money market funds to invest in government Sukuk
SECP makes earlier exemptions permanent to deepen debt, Islamic capital markets
Haris Zamir
Business Editor
Experience of almost 33 years where started the journey of financial journalism from Business Recorder in 1992. From 2006 onwards attached with Television Media worked at Sun Tv, Dawn Tv, Geo Tv and Dunya Tv. During the period also worked as a stringer for Bloomberg for seven years and Dow Jones for five years. Also wrote articles for several highly acclaimed periodicals like the Newsline, Pakistan Gulf Economist and Money Matters (The News publications)
The Securities and Exchange Commission of Pakistan (SECP) has allowed money market mutual funds to invest in exchange-listed Government of Pakistan Ijarah Sukuk with maturities exceeding six months and up to one year.
The step aimed at strengthening Pakistan’s debt and Islamic capital market has been termed as healthy regulatory development.
The decision, announced through a circular issued by SECP’s Specialized Companies Division, replaces earlier time-bound exemptions granted in 2023 and 2024 and makes the facility a permanent feature of the regulatory framework governing money market schemes.
Speaking on the development, Zeeshan Rehman Khattak, commissioner of the Specialized Companies Division, told Nukta said that the SECP remains committed to nurturing Pakistan’s debt segment.
He noted that the move would broaden the investment universe of money market funds while preserving their low-risk and high-liquidity profile.
According to him, the initiative is aimed at strengthening regulated institutional participation in the sovereign Sukuk market, improving market depth and liquidity, and supporting more efficient price discovery.
Under the revised framework, Asset Management Companies are permitted to invest, on behalf of their money market schemes, in one-year government of Pakistan Ijarah Sukuk listed and traded on the Pakistan Stock Exchange.
However, the regulator has retained strict safeguards to ensure that the conservative risk profile of money market funds remains intact.
These safeguards include maintaining a weighted average time to maturity (WAM) of not more than 90 days for the net assets of a money market fund, including government securities.
In addition, fund managers are required to clearly disclose their actual exposure to one-year Ijarah Sukuk in monthly reports, expressed as a percentage of net assets, to enhance transparency for investors.
All other conditions governing money market schemes, particularly those related to risk management, will continue to apply unchanged.
The SECP stated that the decision has been taken under the powers conferred by Section 282B(3) of the Companies Ordinance, 1984, read with Regulation 55(2) of the Non-Banking Finance Companies and Notified Entities Regulations, 2008.
The circular has taken immediate effect and has been circulated to chief executive officers of asset management companies, the Mutual Funds Association of Pakistan, and trustees of collective investment schemes.
Market participants view the move as a meaningful step toward increasing liquidity and demand for government Sukuk, while offering money market funds slightly enhanced yield opportunities without compromising investor protection.
The regulator also emphasized that retail investors will remain safeguarded through strict maturity limits and enhanced disclosure requirements.
Comments
See what people are discussing