KARACHI: The Pakistan Stock Exchange (PSX) announced on Thursday it had launched a Shariah-compliant trading counter that restricts trading to securities compliant with Islamic principles, in a move it said would make Islamic investment opportunities more accessible.

Pakistan has sought to expand Islamic finance in the country after the Federal Shariat Court (FSC) directed the government in 2022 to eliminate interest-based banking and financial systems by 2027. The FSC had ruled that interest, or riba, is prohibited under Islamic law.

Pakistan’s Islamic finance sector has expanded rapidly in recent years. According to official data, Islamic banking now accounts for roughly a quarter of the country’s banking assets and deposits, while more than half of listed equities on the Pakistan Stock Exchange considered Shariah-compliant.

The launch of the Shariah-compliant trading counter was marked with a Gong Ceremony at the stock exchange on Thursday. It was attended by representatives of the central bank, the Securities and Exchange Commission of Pakistan, along with Shariah scholars and brokerage houses.

“Thirty-nine brokers have been onboarded to offer Shariah-compliant trading through Islamic windows,” the stock market said in a press release. “Two more brokerage houses are licensed as full-fledged Shariah-compliant brokers.”

The stock market said the counter is governed by operational procedures and regulations prescribed by the PSX. It said trading is limited to Shariah-compliant equities, Islamic instruments such as government Ijarah Sukuk and corporate Sukuk, adding that non-compliant securities are prohibited.

“Interest-based leverage products such as MTS are blocked, with Murabaha Share Financing (MSF) offered as the Shariah-compliant alternative,” the stock market said. “Short selling and derivatives trading are also not permitted. Investors can divest non-compliant holdings to purify their portfolios.”

A new Shariah Portal on the PSX Data Portal lists every Shariah-eligible stock and Sukuk, it said. Farrukh H. Sabzwari, chief executive officer of the PSX, said the platform is expected to draw more investors from Pakistan’s predominantly Muslim population.

“By providing a dedicated trading environment supported by system-based compliance controls, this initiative enhances investor confidence, improves accessibility to Islamic investment opportunities, and further strengthens the country’s Islamic capital market ecosystem,” he said.