Karachi: In an initiative to enhance the secondary market of Government of Pakistan Ijarah Sukuk (GIS), the Pakistan Stock Exchange Limited (PSX), in collaboration with the National Clearing Company of Pakistan Limited (NCCPL) and the Central Depository Company of Pakistan Limited (CDC), has announced the implementation of a Delivery Versus Free (DVF) reporting mechanism. This new mechanism will be operational through the TREC Holders Information Management System (THIMS) of PSX beginning July 16, 2025. The initiative is a concerted effort to facilitate wider participation and promote Shariah-compliant financing activities within the market.

The implementation of the DVF module addresses a previously unmet need for a settlement mechanism that allows the movement of securities without the simultaneous movement of funds. According to information available from the Pakistan Stock Exchange (PSX), this functionality will now enable Market Participants, including Islamic Banks, Commercial Banks, Asset Management Companies (AMCs), and Banks' Corporate Clients, to execute Bai' Muajjal transactions through the Capital Market Infrastructure Institutions (CMIIs) platform, adopting a process akin to the Over-The-Counter (OTC) market.

The Bai' Muajjal transaction process requires adherence to a standardized three-leg system. The first leg involves executing a Delivery-Versus-Payment (DVP) transaction via the NDM session on the JTT system. The second leg involves the initiation and acceptance of DVF through THIMS, and the final leg entails another DVP transaction through the NDM session. Participants are responsible for ensuring that this sequence is strictly followed.

Key aspects of the new DVF mechanism include its exclusivity to GIS transactions and the requirement for reporting on THIMS to be completed 30 minutes before the Bills & Bonds (BnB) market's closure. Only BnB-enabled securities brokers are permitted to execute Bai' Muajjal transactions. Commercial Banks and Mutual Funds, as direct trading participants of PSX, may conduct these transactions through their proprietary trading system ID or via BnB-enabled brokers, with settlements processed through the NCCPL's IDS module.

This development represents a significant advancement in the GIS secondary market by bolstering the infrastructure necessary for efficient and compliant trading activities.