Pakistan raised PKR 2.25 trillion through Ijarah Sukuk since December 2023

Pakistan government has successfully raised PKR 2.25 trillion through Ijarah Sukuk since December 2023

Securities & Exchange Commission of Pakistan (SECP) facilitated the market operator in conducting 18 Ijarah Sukuks auctions.

According to SECP, the trading volumes in the secondary market have been gradually increasing as market participants become more familiar with the system.

This initiative is the outcome of active collaboration between various stakeholders, including the Ministry of Finance (MOF), SECP, State Bank of Pakistan (SBP), banks, capital market institutions (CMIs), mutual funds, and brokers.

Traditionally, Government Debt Securities (GDS) were issued and traded in the over-the-counter market. However, in December 2023, the MOF, with the approval of the federal government, decided to utilize the services of CMIs for the issuance, registration, trading, settlement, and transfer of Shariah-compliant GDS.

The SECP supported the MOF in this decision and worked closely with the Debt Management Office (DMO) and CMIs to implement it.

The transition to using CMIs for GDS required amendments by the Federal Cabinet to the rules governing GDS, changes in regulations by the CMIs, and the development and deployment of relevant processes, procedures, and software.

Market participants, including banks, mutual funds, and the brokerage industry, provided extensive support.

In recent months, various steps have been taken by CMIs, with SECP's approval, to support the GDS market.

These measures include rationalizing brokerage commissions, implementing a revaluation mechanism based on brokers' quotations, enabling same-day settlement, and providing direct access to secondary market trading for banks and mutual funds.

These initiatives aim to enhance transparency, competition, efficiency, and tax collection in the domestic debt market.

SECP remains committed to working closely with the MOF to develop the domestic debt market. The enhanced transparency, wider outreach, increased competition, standardized processes, and necessary checks and balances are expected to boost investor confidence and market efficiency. This initiative is poised to broaden opportunities for both investors and the government, contributing to Pakistan's economic growth.