The Securities and Exchange Commission of Pakistan (SECP) has approved in-principle a comprehensive reform roadmap aimed at reviving and expanding Pakistan’s market for investment funds that are traded on the stock exchange like shares.
The initiative is designed to improve market liquidity, widen investor access, and reduce overall costs, while strengthening participation in capital markets.
According to SECP, the plan will be rolled out in phases based on a defined implementation timeline. It has been developed after consultations with key stakeholders, including the Pakistan Stock Exchange (PSX), National Clearing Company of Pakistan Limited (NCCPL), Central Depository Company (CDC), Mutual Funds Association of Pakistan (MUFAP), securities brokers, and asset management companies.
Under the new framework, asset management companies will be allowed to directly offer these exchange-traded investment products, moving beyond the existing model where investors mainly rely on brokers to access them. AMCs will also be able to assist investors in opening brokerage accounts, enabling direct investment through their platforms without going through traditional order placement channels.
To improve distribution and lower costs, the reforms introduce a revenue-sharing mechanism allowing asset managers to share a portion of their management fee with brokers for distribution services. The aim is to align incentives and attract a broader investor base.
The roadmap also proposes allowing securities brokers to take a more active role, including the ability to launch and manage exchange-traded investment products. This is expected to reduce layers in the system and improve product variety and market depth.
In addition, the plan recommends including passive investment options such as index-based funds within the Voluntary Pension System (VPS), offering investors a lower-cost alternative to traditional equity-based pension fund structures.
The reforms will be supported by digital onboarding systems, investor awareness campaigns, and operational upgrades across market infrastructure. SECP has directed relevant institutions to begin necessary regulatory and technical preparations for implementation.
The regulator said the reforms are aimed at making capital markets more transparent, efficient, and accessible, while encouraging broader participation from both retail and institutional investors.
