The Security and Exchange Commission of Pakistan (SECP) regulates important elements of non-Islamic banking, financial services industry, Islamic capital market and corporate sector.
According to SECP Annual Report, Islamic Finance Department (IFD) serves as a key pillar of SECP for ensuring Shariah compliance by coordinating and providing advisory in the areas, include Shariah compliant companies, Shariah compliant securities, Modarabas, Takaful operators and window Takaful operators, Islamic non-banking financial institutions, Islamic mutual and pension funds and Shariah compliant real estate investment trusts.
Under Shariah Governance Regulations, 2018, thus far, the SECP has issued certificates of Shariah compliance to seven companies in terms of the Shariah Governance Regulations, 2018, for the development of the Islamic financial capital market.
In addition, SECP has issued certificates of Shariah compliance for sukuk issuances worth Rs280 billion, including the “Power Energy Sukuk-II” by Government of Pakistan worth Rs200 billion and “Pakistan International Airlines Corporations Limited-Sukuk” worth Rs20 billion, report added.
Under the Shariah Advisors Regulations, 2017, one new Shariah Advisor was registered with the SECP during the year. It is pertinent to mention that so far, 105 Shariah advisors have been registered with the SECP, including six private limited companies for providing Shariah advisory services.
The report said that under strategic alliance for promotion of Islamic finance, SECP successfully delivered a series of webinars for the promotion and development of Islamic finance in collaboration with IBA-Centre for excellence in Islamic Finance. So far, three webinars on Islamic Capital Market, Islamic Fintech and Islamic Regtech have been arranged. SECP has also delivered a session on Islamic finance to the students of Arid University Department of Management Sciences. IFD plans to hold an international summit on Islamic Finance in collaboration with IFSB, AAOIFI and CEIFs in the Month of June.
SECP has been gradually adopting Accounting and Shariah Standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) to achieve a high degree of standardization in the operational and business practices of Islamic financial institutions.
In this regard, SECP has issued draft notification for adoption of seven (7) additional AAOIFI Shariah Standards, while reviewing additional Shariah standards are being reviewed for inclusion in the draft.
SECP is providing its regulatory support to spur growth of the Islamic finance industry through scaling up Islamic finance regulations to provide an enabling regulatory environment for the stakeholders falling under purview of SECP. In order to create ease of doing business, amendments in the Shariah Governance Regulations, 2018 are in process.
SECP in collaboration with all the stakeholders, will pursue infusing of Shariah principles in disruptive Fintech innovations (Smart contracts, Big Data and Blockchain technology), which will help in the financial inclusion and further enhance the customer experience for the Shariah sensitive investors. The department will also review RegTech solutions available for the supervision of Islamic financial industry, specifically in the areas of Shariah compliance and Shariah Audit.
SECP plans to work with stakeholders for increasing the volume of Takaful in Pakistan, by launching of Taktech (Takaful technology) to revolutionize the takaful sector, by complementing existing initiatives to enhance takaful coverage to the unserved segments of the population.
SECP will also explore the Asset Light Sukuk framework for the issuance of Asset Light Sukuks. For Green sukuks, IDF is already conducting research for creating regulatory framework, enabling issuance of green sukuks in Pakistan.
In consultation with Institute of Chartered Accountants of Pakistan (ICAP), IFD is also in the process of introducing a Shariah audit qualification for external Shariah auditors, under Shariah Governance Regulations, 2018. This step shall help in streamlining the external Shariah audit profession in Pakistan.—APP