Opportunity comes knocking |
Pakistan’s capital market is poised to enter a faster and more efficient phase as the Pakistan Stock Exchange (PSX) transitions from a T 2 to a T 1 settlement cycle, effective February 9, 2026.
This shift, led by the Securities & Exchange Commission of Pakistan (SECP), will allow securities transactions to be settled within one business day instead of two, bringing the country’s market infrastructure closer to international practices.
India’s experience offers a useful benchmark. When the Bombay Stock Exchange and National Stock Exchange (NSE) completed the shift to a T 1 settlement cycle in January 2023, cash flows across the market improved materially. Data from the NSE show that faster settlements released investor funds and broker margins a full day earlier, reducing capital locked in unsettled trades. Importantly, trade-related defects declined sharply — nearly halving from about 0.82 per cent to 0.41pc.
Equally important is the reduction in systemic and counterparty risk. Longer settlement periods expose markets to uncertainty, especially in volatile environments like ours.
By adopting the T 1 settlement, the Pakistan Stock Exchange demonstrates regulatory seriousness and operational maturity that could help improve foreign portfolio inflows
Prices can swing, counterparties can fail, and confidence can erode in the gap between trade execution and settlement. A T 1 framework cuts this exposure window in half, strengthening financial stability and making the market more........