SECP Amends Murabaha Share Financing Regulations

In an endeavour to promote Islamic finance products in the capital market, the Securities and Exchange Commission of Pakistan (SECP) has introduced amendments in Murabaha Share Financing Regulations. Murabaha Share Finance (MSF) is a Shariah-compliant leveraged product, a viable alternate avenue for capital market investors who prefer the Islamic mode of financing. The product was initially launched in September 2019 with the guidance of renowned practicing Shariah scholars. However, through recent amendments, a system-based initiation and affirmation process has been introduced for Murabaha Sale Transaction. This will facilitate Islamic Financial Institutions (IFIs) and market participants to execute sale transactions with more ease and comfort. Further, options for collateral management have been added to facilitate MSF Seller and market participants in executing Murabaha Share Financing and release of shares against payment of cash or other collateral. SECP has conducted a number of awareness sessions with Banks, Brokers and investors to adopt Shariah-compliant leverage facilities in the capital market. It is hoped that the facilitation will result in increased activity in MSF Product and liquidity in the capital market.