Pakistan ETF Reforms: SECP Revives PSX ETF Market

Pakistan’s SECP has granted in-principle approval for a comprehensive reform roadmap to grow the Exchange Traded Fund (ETF) market. The goal is to improve liquidity, expand investor access, and reduce overall investment costs across PSX-listed products.

Developed after consultations with key players — PSX, NCCPL, CDC, MUFAP, securities brokers, and asset management companies — the reforms will roll out in phases. The plan aims to deepen market participation while keeping costs transparent and predictable.

What the ETF framework will change

Under the new framework, asset management companies (AMCs) will be allowed to directly offer ETFs as part of their product line. AMCs will also help investors open brokerage accounts, enabling ETF investments through AMC platforms without broker-mediated orders. This should boost convenience and participation.

A revenue-sharing model is proposed where AMCs may share a portion of ETF management fees with securities brokers for distribution services. The idea is to align incentives and broaden the ETF investor base.

The reforms also envisage brokers taking a more active role, including the potential to launch and manage ETFs. ETFs and passive funds may even be included in the Voluntary Pension System (VPS) to offer low-cost market exposure.

Digital onboarding, investor awareness campaigns, and system upgrades will support implementation. Regulators will issue instructions to relevant institutions to begin adjustments and ensure compliance.

Why this matters for Pakistan

The ETF market in Pakistan should gain deeper liquidity and wider access for both retail and institutional investors. The SECP reforms demonstrate a clear move toward a more transparent, efficient, and cost-effective investment landscape.

Pakistan ETF reforms signal a stronger regulatory framework that can attract participation and support sustainable capital-market growth.