SECP Grants Landmark Approval to Al-Hilal Shariah Advisors for Independent Securities Screening
In a significant development for Pakistan's Islamic finance sector, the Securities and Exchange Commission of Pakistan (SECP) has officially approved Al-Hilal Shariah Advisors (Pvt) Limited to independently conduct Shariah screening of securities. This authorization marks a historic milestone, as Al-Hilal Shariah Advisors becomes the first entity outside the Pakistan Stock Exchange (PSX) and its established partners to receive such regulatory endorsement.
The approval effectively opens the door for increased competition and diversity in Shariah-compliant investment services, providing investors with alternative options for verifying the Islamic legitimacy of securities. Under the Shariah Governance Regulations of 2023, any entity other than an issuer that publicly declares securities as Shariah-compliant must develop a screening process approved by SECP.
Current Landscape and Market Impact
Presently, the screening of listed securities for Shariah compliance is managed exclusively by the Pakistan Stock Exchange in collaboration with Meezan Bank Limited and Al-Meezan Investments. According to recent data, out of a total of 535 listed securities on the PSX, 308 are currently classified as Shariah-compliant.
These compliant companies represent a substantial market capitalization of Rs. 12,373 billion, accounting for approximately 63 percent of the total market capitalization of Rs. 19,679 billion as recorded on December 31, 2025. This data underscores a clear and growing trend among listed companies towards adopting Shariah compliance in recent years, reflecting the increasing demand for Islamic financial products.
About Al-Hilal Shariah Advisors and Its New Role
Al-Hilal Shariah Advisors (Pvt) Limited is an SECP-licensed Shariah Advisor that provides comprehensive Shariah advisory, governance, and compliance services to a wide range of clients, including capital market participants, financial institutions, and corporate entities. The company also operates as a securities advisor, offering investment advisory services.
With this new approval, the company is now empowered to independently screen securities for Shariah compliance, benefiting both its clients and the general public. A key feature of the approved screening process is its reliance on the latest available financial information to ensure accuracy and relevance.
Enhanced Screening Methodology and Future Prospects
The approved process establishes clearly defined continuity rules for the inclusion and exclusion of securities from the Shariah-compliant list. This is supported by a formal compliance mechanism designed to ensure strict adherence to all regulatory requirements and Shariah principles.
This innovative methodology is expected to catalyze the development of new Islamic indices, providing additional benchmarks for Shariah-compliant investing within Pakistan's capital market. Such indices could offer investors more tailored and diverse options for aligning their portfolios with Islamic values.
Regulatory Conditions and Operational Updates
SECP has granted this approval with specific conditions to ensure coordination and consistency in the market. The participant must coordinate with the Pakistan Stock Exchange before creating any Shariah-compliant index in the future, promoting a harmonized approach to Islamic finance standards.
Furthermore, the updated list of Shariah-compliant securities will now be published on a quarterly basis, a significant improvement over the previous six-monthly screening cycle. This increased frequency will provide investors with more timely and accurate information, enhancing transparency and decision-making in the Islamic investment landscape.
