SECP Forms Corporate Debt Reform Panel

The Securities and Exchange Commission of Pakistan (SECP) has launched a comprehensive review of Pakistan's corporate debt market by forming a high-level working group to recommend reforms aimed at making corporate bond and Sukuk issuances faster, more affordable and more efficient.

According to a notification issued on July 30, the committee will be led by SECP Commissioner Muhammad Ali Farid Khwaja and has been assigned to identify the regulatory, legal and operational challenges delaying debt issuances while proposing practical reforms to strengthen the country's corporate debt market.

The SECP said feedback from market participants highlighted lengthy approval procedures and high issuance costs for both private placements and public offerings as the main obstacles to market growth. The regulator noted that a well-developed corporate debt market is essential for mobilising long-term capital, expanding investment opportunities and reducing dependence on conventional financing.

As part of its mandate, the working group will conduct a detailed review of the entire debt issuance process, examining every stage from regulatory approvals to stock exchange listings. It will recommend measures to shorten processing times, simplify procedures and standardise documentation to make debt fundraising more efficient.

The committee will also evaluate the overall cost of issuing debt instruments, including regulatory fees, professional charges, listing expenses, taxes and other transaction costs, with the goal of recommending measures to reduce issuance costs.

Another key area of review is Pakistan's credit rating framework. The panel will assess how the current system affects costs, timelines and market access, while recommending improvements to enhance transparency, strengthen investor confidence and simplify the credit rating process. It will also explore opportunities for introducing innovative credit rating products.

The review will further cover Pakistan's Islamic capital market, where the working group will examine the existing regulatory and Shariah framework governing Sukuk issuances. It will identify legal, operational and Shariah-related challenges contributing to higher costs and longer processing times before proposing reforms to standardise Sukuk structures, improve efficiency and support the expansion of the Islamic corporate debt market.

In addition, the panel will review the taxation framework for corporate debt instruments, recommend changes to remove tax-related barriers and propose amendments to relevant legal and regulatory provisions where necessary. It will also consult industry stakeholders and compare Pakistan's framework with international best practices before submitting its recommendations.

The working group includes representatives from the Ministry of Finance, commercial banks, financial institutions, credit rating agencies and other key stakeholders.

SECP Chairman Dr Kabir Ahmed Sidhu said developing a stronger corporate debt market remains one of the regulator's top priorities, adding that a deeper market would improve access to long-term financing for both businesses and the government.