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Repair Windows errors before they cause bigger problemsFix Now →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Clear out junk files and repair common Windows errorsFree Scan →Pakistan’s Securities and Exchange Commission (SECP) approved revised Shariah screening criteria for the PSX-KMI All Share Index on February 26, 2026. The headline change lowers the interest-bearing debt-to-total-assets limit from 37% to 33%; the revisions also add company star ratings, a formal objection window and screening for new IPO listings. The main changes are scheduled to take effect at the November 2026 recomposition, using June 2026 annual or half-yearly accounts.
What changed in the PSX-KMI screening rules?
The Pakistan Stock Exchange (PSX) notice PSX/N-244 sets out the approved methodology changes. The debt threshold is the specific screening limit changed in the notice; the other additions provide more information about screened companies and set out procedures for objections and new listings.
| Change | What the revised method says |
|---|---|
| Interest-bearing debt | Maximum interest-bearing debt relative to total assets falls from 37% to 33% (PSX, 2026). |
| Company ratings | Companies in the KMI All Share Index receive a three-, four- or five-star rating based on specified debt, investment and income ratios. |
| Company objections | Companies may submit documented requests for reconsideration during a five-working-day window after PSX publishes the KMI All Share list (PSX, 2026). |
| New IPO listings | A newly listed company that passes Shariah screening is to enter KMI All Share from its listing date. PSX says this element applies from its February 26, 2026 notice. |
| Main implementation | The revised criteria are scheduled for the November 2026 recomposition, based on June 2026 annual or half-yearly accounts. |
SECP described the changes as aligned with international benchmarks and said they aim to strengthen investor confidence. That is the regulator’s stated rationale; its release does not name a particular international standard.
How do the new company star ratings work?
The ratings give additional information about a company’s ratios within the screened group. They are not a replacement for the index’s eligibility screening requirements.
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| Rating | Non-compliant debt ratio | Non-compliant investment ratio | Non-compliant income ratio |
|---|---|---|---|
| Five stars | 0% | 0% | 0% |
| Four stars | Below 11% | Below 11% | Below 2% |
| Three stars | Below 22% | Below 22% | Below 4% |
The PSX notice describes these as degrees of compliance using debt, investment and income ratios. It does not say that a higher rating predicts investment returns or establishes whether a security is suitable for a particular investor.
How can a company challenge its Shariah status?
- Wait for PSX to publish the KMI All Share list and the relevant notice.
- During the five working days after publication, send PSX a documented request for reconsideration to the address specified in that notice.
- After the objection window closes, PSX says approved changes will appear in a revised notice within five working days.
The applicable notice is the source for the submission address and any required supporting information; the February 26 announcement does not give a general address to use for every future objection.
When do the revised criteria take effect?
PSX scheduled the main methodology changes for the November 2026 recomposition, using June 2026 annual or half-yearly accounts. The index brochure was to be updated to reflect the revisions. As of the announced schedule, November implementation is a planned change, not confirmation that the recomposition has already occurred.
SECP’s February release also says it advised PSX to consider lowering the non-compliant investments-to-total-assets ratio from 33% to 30%, moving to quarterly index updates and automating data collection. These were proposals for PSX to consider, not changes confirmed as adopted in the February notice.
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Which index does this announcement cover?
The revision concerns the PSX-KMI All Share Index, which PSX describes as comprising all Shariah-compliant companies listed on the Pakistan Stock Exchange. It should not be confused with the KMI 30, a separate index tracking the 30 most liquid Shariah-compliant companies. PSX says KMI 30 uses float-adjusted market-capitalization weighting and caps an individual company’s weight at 12%.
The broader policy context is Pakistan’s phased transition toward a Riba-free financial system by December 2027, a target cited by SECP. That date is not the implementation date for the index revision.
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In a separate March 10, 2026 release, SECP said 308 of 535 listed securities were classified as Shariah-compliant as of December 31, 2025. Their combined value was Rs. 12,373 billion, approximately 63% of PSX’s Rs. 19,679 billion total market capitalization. Those are market-wide figures from that date, not an estimate of the effect of the February methodology change.
SECP also separately approved Al-Hilal Shariah Advisors to screen securities independently in March 2026. That approval is distinct from the PSX-KMI methodology revision; SECP said an independent Shariah-compliant index must coordinate with PSX.
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Primary sources
- SECP February 26, 2026 release
- PSX notice PSX/N-244, February 26, 2026
- PSX index descriptions
- SECP March 10, 2026 release
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