SECP launches Capital Market Development Fund
The SECP has operationalized the Capital Market Development Fund with PKR 30 million in seed capital to expand financial literacy and investor outreach.
ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has formally operationalized the Capital Market Development Fund (CMDF) with defined Terms of Reference (TORs), a step aimed at addressing immediate development needs of the country’s capital market while aligning with international best practices.
The Fund, approved this week, has been designed to strengthen financial literacy, promote public awareness, and equip retail investors with knowledge of investment opportunities available in Pakistan’s capital market. Regulators expect the initiative to enhance financial inclusion and provide alternative funding channels to meet the credit requirements of the economy at a time when access to traditional financing remains constrained.
According to SECP, the CMDF will also support capacity building of market participants and extend outreach to untapped demographic and geographic segments, particularly smaller investors who remain outside formal financial structures. Officials believe that improved investor education can not only deepen participation but also increase transparency and resilience across equity and commodity markets.
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Seed funding of PKR 30 million has been pooled by the Pakistan Stock Exchange (PSX), National Clearing Company of Pakistan Limited (NCCPL), Central Depository Company (CDC), and Pakistan Mercantile Exchange (PMEX). In addition, these entities will contribute one percent of their annual revenue on a recurring basis to sustain the Fund’s activities and long-term development programs.
The CMDF will be managed by the Institute of Financial Markets of Pakistan (IFMP), while strategic oversight and governance will rest with a Steering Committee comprising representatives from IFMP, PSX, NCCPL, CDC, and PMEX. The committee has been tasked with ensuring accountability and directing funds toward initiatives that create measurable market impact.
The official launch took place during a consultative workshop titled “Unlocking Capital Market Potential for Banks” in Karachi on August 18, 2025, where Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb endorsed the initiative. Addressing participants, the finance minister emphasized that broadening market participation is essential for diversifying investment avenues and reducing the banking sector’s dominance in credit provision.
Industry analysts have described the CMDF as a long-awaited instrument that could help bridge structural gaps in Pakistan’s capital markets. For years, limited investor education and low penetration of formal investment products have restricted market growth. Pakistan’s equity market participation rate remains far below that of regional peers such as India and Bangladesh, where public investment has increased significantly due to targeted awareness programs and policy incentives.
The SECP has in recent years introduced several regulatory reforms to modernize the capital market, including the introduction of new debt instruments, digital account opening mechanisms, and reforms in the mutual funds sector. The CMDF adds an institutional mechanism to complement these reforms by ensuring that education, outreach, and professional training are backed by a dedicated funding stream.
Experts note that financial literacy programs funded through the CMDF could play a role in reducing speculative trading behavior, promoting long-term investment culture, and supporting the growth of instruments such as exchange-traded funds (ETFs), government debt securities, and commodity futures. If executed effectively, the initiative may help attract foreign institutional investors by demonstrating stronger domestic participation and market depth.
Pakistan’s capital markets have historically been underutilized as a financing avenue for businesses, with bank lending accounting for the majority of credit to the private sector. By channeling savings into equity, bonds, and commodities, the CMDF-backed initiatives could ease pressure on the banking system and help corporates raise funds through diversified instruments. This would also support the government’s broader agenda of deepening financial markets as part of economic stabilization efforts under its reform program.
The launch of the CMDF has been welcomed by stakeholders as a step toward a more inclusive and resilient financial ecosystem. While challenges remain in terms of investor trust, enforcement of market regulations, and volatility risks, the SECP’s move signals a shift toward institutionalized development of capital markets rather than ad hoc awareness drives.
In his concluding remarks at the launch, Finance Minister Aurangzeb underlined that the government and regulators will continue to prioritize reforms that strengthen investor protection and widen access to financial products. The operationalization of the CMDF, he said, is not only a milestone in capital market reform but also an opportunity to connect savings with productive investments critical for Pakistan’s long-term growth.
The Capital Market Development Fund is now expected to begin disbursing resources for financial literacy and capacity-building initiatives in the coming months, with oversight by the Steering Committee to ensure transparency and impact measurement. Stakeholders hope the Fund will evolve into a permanent feature of Pakistan’s financial architecture, shaping how future generations of investors engage with the country’s markets.
