Capital Market Development Fund launched to broaden investor participation

ISLAMABAD: Pakistan’s leading capital market institutions on Wednesday set up the Capital Market Development Fund (CMDF) to promote financial literacy, widen financial inclusion and increase retail investor participation in capital markets across the country.

The fund has been established under the auspices of the Securities and Exchange Commission of Pakistan (SECP) to improve coordination across the industry and reinforce institutional capacity in the country’s capital markets. Its founding participants are 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).

Speaking at the launch ceremony, Finance Minister Muhammad Aurangzeb said recent regional tensions had underlined the importance of making independent commercial choices, diversifying energy sources and mobilising 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 reiterated the government’s commitment to economic stability, sustainable growth and reforms in the financial sector. He stressed the need to strengthen capital markets, encourage local investment, move toward self-reliance and carry out key reforms in the energy sector, while saying the economy was continuing on a positive path despite regional and economic pressures.

He said Pakistan’s economic indicators were improving steadily despite regional uncertainty and global economic challenges, adding that the government remained focused on improving the current account balance, reducing the fiscal deficit and preserving macroeconomic stability. The finance minister also said the stock market had shown resilience during difficult periods, which he said reflected rising investor confidence in the country’s economic direction.

He further said the SECP had an important role in expanding investor awareness, making investment easier and introducing legal and regulatory changes in the capital market sector, while assuring full government support for reforms aimed at deepening financial markets.

Institutional framework and targets

The agreement for the new fund was signed by PSX Chief Executive Officer Farrukh H Sabzwari, CDC CEO Badiuddin Akber, NCCPL CEO Naveed Qazi, PMEX CEO Khurram Zafar and IFMP CEO Dr Mobashar Sadik.

SECP Chairman Dr Kabir Ahmed Sidhu said investor participation in Pakistan’s capital market remained below one per cent of the population despite recent growth. He said the investor base was being targeted to rise to 2.5 million in the coming years through structural reforms and investor facilitation measures.

Sidhu said onboarding procedures were being streamlined, while Know Your Customer (KYC) and Anti-Money Laundering (AML) frameworks were being simplified to make entry easier for investors without weakening regulatory safeguards. He also identified financial literacy as a major structural challenge, saying investor awareness efforts had remained fragmented and outreach to retail investors limited. He stressed the need for coordinated national efforts to improve investor education, strengthen market understanding and build confidence among investors.

According to market insights shared at the ceremony, around 24,000 new investors entered the market in April 2026. Equity markets remained on a positive trajectory, while the debt capital market saw a relative slowdown, underscoring the need for continued monitoring and data-driven policy action.

Funding model

Dr Mobashar Sadik presented the CMDF’s strategic framework and described it as a

“ring-fenced institutional mechanism”

designed to support long-term capital market development.

He said the fund would begin with an initial contribution of Rs120 million, while participating institutions would contribute one per cent of their annual revenues under what he described as a self-reinforcing funding model to ensure sustainability.

Sadik said the CMDF would work through four main pillars: improving financial literacy and investor awareness, increasing retail investor participation, promoting financial inclusion particularly for women, youth and underserved groups, and strengthening institutional capacity and market infrastructure.