Pakistan regulator approves first independent Shariah securities screener

Pakistan’s securities regulator has approved Al-Hilal Shariah Advisors (Pvt) Ltd to independently conduct Shariah screening of securities, marking the first time an entity other than the Pakistan Stock Exchange (PSX) and its partners has received such authorization.

The approval by the Securities and Exchange Commission of Pakistan (SECP) introduces competition in the provision of Shariah-compliant investment services and creates an alternative pathway for screening listed securities.

Under the Shariah Governance Regulations, 2023, any party other than the issuer that publicly declares securities as Shariah-compliant must adopt a screening methodology approved by the SECP. The regulator said the approval of Al-Hilal Shariah Advisors establishes a structured framework for such independent screening arrangements.

Currently, Shariah screening of listed securities is carried out by the Pakistan Stock Exchange in collaboration with Meezan Bank and Al-Meezan Investments. Of the 535 securities listed on the PSX, around 308 are classified as Shariah-compliant. These companies account for a market capitalization of about 12.37 trillion rupees, roughly 63% of the exchange’s total market capitalization of 19.67 trillion rupees as of December 31, 2025.

The regulator said the data reflects a growing trend among Pakistani companies towards Shariah compliance in recent years.

Al-Hilal Shariah Advisors, an SECP-licensed Shariah advisory firm, provides governance, compliance and advisory services to financial institutions, capital market participants and corporate clients. With the approval, the company can independently screen securities for Shariah compliance for its clients as well as the broader market.

The approved screening framework uses the latest available financial information and sets out clear rules for the inclusion and exclusion of securities from Shariah-compliant lists, supported by a compliance mechanism aligned with regulatory requirements.

The methodology is also expected to facilitate the development of new Islamic market indices, providing additional benchmarks for Shariah-compliant investment in Pakistan’s capital markets.

SECP said the approval requires the firm to coordinate with the Pakistan Stock Exchange before launching any Shariah-compliant index. It also requires the list of screened Shariah-compliant securities to be updated and published on a quarterly basis, replacing the earlier six-month screening cycle.