Capital Market Development Fund established to strengthen Pakistan’s capital markets

ISLAMABAD: Key capital market institutions of Pakistan on Wednesday established the Capital Market Development Fund (CMDF), aimed at promoting financial literacy, expanding financial inclusion and increasing retail investor participation in the capital markets across the country. The main participants of the CMDF included the Pakistan Stock Exchange (PSX), Central Depository Company (CDC), National Clearing Company of Pakistan Limited (NCCPL), Pakistan Mercantile Exchange (PMX) and the Institute of Financial Markets of Pakistan (IFMP). The CMDF was established under the auspices of the Securities and Exchange Commission of Pakistan (SECP) to ensure coordination in the industry and strengthen the institutional capacity in Pakistan’s capital markets. Addressing the ceremony, Finance Minister Muhammad Aurangzeb said recent regional tensions had reinforced the need for Pakistan to make independent commercial decisions, diversify energy resources, and mobilise domestic capital for national development. “We must rely on our own resources and strengthen self-sufficiency. Capital markets can play a vital role in providing the financing needed for economic independence, ” he stated. Aurangzeb reaffirmed the government’s commitment to economic stability, sustainable growth and financial sector reforms. He also emphasised the importance of strengthening capital markets, promoting local investment, achieving self-reliance, and implementing key energy sector reforms, noting that Pakistan’s economy continues to move in a positive direction despite regional and economic challenges. The finance minister noted that despite regional uncertainties and global economic pressures, Pakistan’s economic indicators were showing consistent improvement. He added that the government remained focused on strengthening the current account balance and reducing the fiscal deficit while maintaining macroeconomic stability. Aurangzeb further stated that Pakistan’s stock market had demonstrated resilience during challenging times, reflecting growing investor confidence in the country’s economic direction. The finance czar also emphasised that the SECP had a critical role in expanding investor awareness, improving ease of investment, and introducing legal and regulatory reforms in the capital market sector. He assured the government’s full support for reforms aimed at deepening Pakistan’s financial markets. The agreement was signed by PSX Chief Executive Officer (CEO) Farrukh H Sabzwari, CDC CEO Badiuddin Akber, NCCPL CEO Naveed Qazi, PMEX CEO Khurram Zafar, and IFMP CEO Dr Mobashar Sadik. Chairman SECP Dr Kabir Ahmed Sidhu highlighted that investor participation in Pakistan’s capital market remained below one per cent of the population despite recent growth. He also noted that the investor base is targeted to increase to 2. 5 million in the coming years through ongoing structural reforms and investor facilitation measures. Sidhu added that onboarding processes were being streamlined, while Know Your Customer (KYC) and Anti-Money Laundering (AML) frameworks were being simplified to facilitate investor entry without compromising regulatory safeguards. He further identified financial literacy as a major structural constraint, noting that investor awareness efforts remained fragmented and retail outreach limited, and further emphasised the need for coordinated national efforts to strengthen investor education, improve market understanding, and build investor confidence. Market insights shared during the ceremony indicated that approximately 24, 000 new investors entered the market in April 2026. Equity markets maintained positive momentum, while the debt capital market witnessed relative slowdown, highlighting the need for continued monitoring and data-driven policy interventions. Sadik presented the strategic framework of the CMDF and described it as a “ring-fenced institutional mechanism” designed to support long-term capital market development. He said the fund would be seeded with an initial contribution of Rs120 million, with participating institutions contributing one per cent of their annual revenues to ensure sustainability through a self-reinforcing funding model. Sadik added that the CMDF would operate through four core pillars: strengthening financial literacy and investor awareness, expanding retail investor participation, promoting financial inclusion, particularly among women, youth and underserved segments, and enhancing institutional capacity and market infrastructure.

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