The federal government on Thursday agreed with the new leadership of the Securities and Exchange Commission of Pakistan (SECP) to push ahead with capital market reforms aimed at lowering transaction costs, widening investor participation and reducing reliance on bank financing.
The understanding emerged during a meeting between Finance Minister Senator Muhammad Aurangzeb and the newly appointed SECP Chairman Kabir Ahmed Sidhu, along with Commissioner Ali Farid Khawaja, at the Finance Division in Islamabad.
Officials said the discussions focused on aligning regulatory and policy priorities to deepen capital markets and restore investor confidence through faster approvals, improved market infrastructure and coordinated reform efforts across institutions.
The finance minister said the government was moving away from fragmented, institution-specific reforms toward a system-wide approach through the Capital Markets Development Council. He said finalized terms of reference would help address gaps requiring regulatory changes, legislative support and interagency coordination.
A key area of focus was Pakistan’s debt capital market, where the finance minister stressed the need to reduce dependence on banks as the primary source of financing. He said broader participation by insurance companies, pension funds, asset managers and retail investors was critical for sustainable growth.
The Finance Division shared details of ongoing efforts to strengthen domestic debt management, including improvements in front, middle and back office functions. Officials said deeper collaboration with SECP would now be required to expand market depth and efficiency.
Participants agreed that high friction and intermediation costs remain a major hurdle. Multiple layers between issuers and investors were identified as adding delays and unnecessary expenses, limiting the effectiveness of debt markets. Streamlining issuance processes and improving secondary market functioning were flagged as immediate priorities.
Investor onboarding was discussed as a key enabler of liquidity. The meeting emphasized faster digital account opening, risk-based KYC and consent-based sharing of KYC across financial institutions to make market entry easier, especially for retail investors currently operating in informal channels.
On the equity side, the meeting noted improving IPO activity and discussed steps to broaden participation in equity capital market transactions. The finance minister said expanding the pool of institutions supporting capital raising and ensuring adequate infrastructure capacity would help avoid future bottlenecks.
The SECP leadership also highlighted the need to revisit regulatory frameworks for NBFCs, SME finance and insurance to support access to finance while maintaining prudential oversight. Both sides agreed on enabling regulations that reduce procedural delays and promote compliance through digital tools.
Alternative investment vehicles were discussed as an important source of private capital for infrastructure and priority sectors. Officials noted that fund structures must translate into real investment activity rather than remaining passive or tax-driven, while policy and tax hurdles affecting private equity and venture capital were also reviewed.
The meeting also touched on the role of public capital markets in the government’s privatization agenda, with officials noting that listings can improve price discovery, valuation transparency and corporate governance.
Emerging areas such as digital assets and tokenization were discussed at an exploratory level. The Finance Division briefed participants on early-stage work examining the tokenization of government debt, while stressing that strong regulation, investor education and institutional capacity are essential before any rollout.
Concluding the meeting, the finance minister reaffirmed the government’s commitment to close coordination with SECP on a time-bound reform agenda focused on market deepening, lower transaction costs, faster approvals and transparent regulation. The SECP leadership pledged support to translate the agenda into measurable outcomes.
