The Securities and Exchange Commission of Pakistan (SECP) has initiated a stakeholder consultation on implementing the T+1 settlement cycle at the Pakistan Stock Exchange (PSX). The consultation, which will conclude after the Eid holidays, aims to identify challenges and assess the impact on liquidity, investor participation, operational readiness, and capital requirements.
T+1 settlement is a progressive reform designed to align Pakistan with global best practices. However, stakeholders have noted operational hurdles in the local context. Limited banking hours during Ramadan and delays in cheque clearances often create short-term funding mismatches. Brokers are frequently required to manage these liquidity gaps at their own risk.
Experts also point out that a one-day settlement cycle works most efficiently in a fully digitized market. In Pakistan, reliance on cheque-based transactions and existing banking cut-off timings do not fully support the T+1 framework. Therefore, the consultation is crucial to ensure the reform is practical and inclusive.
SECP has already reviewed stakeholder feedback submitted over recent weeks. The goal is to develop a roadmap that supports market stability while addressing operational challenges. By involving key market institutions—including PSX, Central Depository Company (CDC), National Clearing Company of Pakistan Limited (NCCPL), stockbrokers, mutual funds, and custodians—SECP intends to implement a coordinated and sustainable approach.
Globally, T+1 settlement cycles are gaining momentum. The United States, Canada, and Mexico adopted T+1 in 2024, while India fully implemented it in 2023. China also operates a T+1 framework for equities. Meanwhile, major markets in the UK and European Union are transitioning toward shorter settlement cycles, reflecting a global shift to faster, safer, and more efficient trading processes.
The current global financial environment, marked by geopolitical tensions and regional conflicts, has increased volatility and liquidity pressures. In such circumstances, a consultative approach to T+1 settlement is essential. It ensures that Pakistan’s markets remain stable while gradually adopting a more efficient system.
SECP’s careful planning and stakeholder engagement aim to create a market that balances speed, security, and operational readiness. By addressing local challenges and learning from international best practices, the T+1 settlement could significantly enhance Pakistan’s financial market efficiency in the coming years.
