Karachi – August 25, 2025: The Institute of Cost and Management Accountants of Pakistan (ICMA) has introduced a landmark initiative titled “ICMA’s Defence Framework: Securing the Stock Market.” Developed by ICMA’s Research and Publications Department, the framework sets out a four-point strategy to safeguard the Pakistan Stock Exchange (PSX) during wars, geopolitical tensions, and other emergencies — positioning the stock market as part of the nation’s broader economic defence system.
The urgency of these reforms became clear during the April–May 2025 border conflict, when Pakistan Stock Exchange (PSX) suffered sharper losses than India’s National Stock Exchange (NSE). By contrast, India’s Defence Sector Index rose nearly 9 percent in the same period, helping stabilize its market. This contrast highlighted Pakistan’s vulnerability and the need for stronger safeguards to protect investors and national confidence.
At the heart of ICMA’s Defence Framework is the creation of a Defence Sector Index on PSX. Similar indices in India, Germany, Singapore, the United States, the United Kingdom, and Japan represent around 2 percent of total market share and have consistently acted as stabilizers during periods of geopolitical stress. A Defence Index in Pakistan would channel investment into strategic industries, reduce volatility, and project resilience to both domestic and international investors.
The second reform is the restructuring of circuit breaker rules at PSX. ICMA has recommended a level-wise mechanism modeled on the New York Stock Exchange, where trading halts are triggered in stages during steep market declines. This approach has been proven effective in calming markets and restoring order in advanced economies. For Pakistan, ICMA proposes halts at 4, 8, and 12 percent declines in the KSE-30 or KSE-100 index — a system that would prevent panic-driven sell-offs and improve transparency.
The third proposal is the establishment of a Sovereign Market Stability Fund, backed by the Government and jointly managed by the Ministry of Finance and SECP. Drawing on South Korea’s 2020 Market Stabilization Fund, this mechanism would inject liquidity, purchase listed stocks, or provide guarantees during crises. Such a fund would serve as a vital shield to protect investors and restore confidence when shocks threaten market stability.
The fourth element emphasizes transparency and preparedness. ICMA has proposed that SECP require listed companies to publish mandatory crisis-risk disclosures, including geopolitical risk assessments and business continuity plans. The United Kingdom has already adopted similar rules through its Financial Conduct Authority (FCA), which have enhanced transparency, accountability, and investor trust. Adopting this practice in Pakistan would strengthen market resilience and improve investor decision-making. Together, these four measures form ICMA’s Defence Framework — a globally aligned blueprint designed to protect investors, reduce volatility, and reinforce Pakistan’s stock market as a pillar of national economic resilience.
ICMA has called upon the Government of Pakistan, the Ministry of Defence, the Ministry of Finance, the Securities and Exchange Commission of Pakistan (SECP), and the management of PSX to give urgent consideration to these reforms. In today’s unpredictable environment, hesitation is costly. By adopting this framework, Pakistan can ensure that PSX remains not a casualty of crisis, but a shield of stability and strength for the national economy.
