Modaraba and PTC

The stock exchange is becoming an increasingly more central institution in the Pakistani economy. The cabinet has approved some changes to securities laws. As a result, prices of participation-term certificates and mudaraba shares will increasingly be quoted on the stock exchange floor. Shares in Islamic institutions will be traded in the exchange. It appears a perfect scheme for letting investors participate in Islamic firms through both term certificates and common stocks. The certificates are designed to become obsolete after the financed company repays its loans. It is crucial that financing corporations offer participation-term certificates and mudarabas. One possibilty is for the government to mandate a 10% level of participation-term-certificate finance in each finance house.