MANILA — The Philippine Stock Exchange, Inc. (PSE) is studying the creation of a Shari'ah-compliant index as it moves to broaden its Islamic investment offerings beyond the screening of listed companies, a senior official said.

"The general ask from participants is that you should have a standard interpretation," PSE Chief Operating Officer Roel A. Refran said during a panel discussion at the 2026 ASEAN Capital Markets Forum International Conference in Manila on Thursday. "The screening is the easy part. The hard part is, what are the standards?"

According to Mr. Refran, a Shari'ah-compliant index could identify eligible companies and serve as a benchmark for investors seeking investments that adhere to Islamic principles. He added that establishing clear inclusion standards would help create a more structured market for Shari'ah-compliant investments.

Benchmarks of this kind are already familiar elsewhere in the region: exchanges in Malaysia and Indonesia operate Shari'ah-compliant indices, and major global index providers maintain screened index families, giving investors established reference points for building portfolios that observe Islamic principles, under which conventional interest-bearing instruments are generally excluded.

To date, the exchange's screening process has relied on financial and nonfinancial criteria based on standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions, a Bahrain-based standard-setter for the international Islamic finance industry.

Mr. Refran said the framework could apply to both equities and Sukuk, Islamic bonds structured to comply with Islamic law, which prohibits interest. He cited sustainable finance and carbon markets as examples of areas where classification systems help distinguish investment products according to defined criteria.

Investor demand, he noted, remains a key consideration in deciding which products and benchmarks the exchange develops. "In the end, you have to look at where investors are asking you to build something," he said. "You don't always build something that becomes a blockbuster."

The development follows moves by the Securities and Exchange Commission, which earlier this year issued a memorandum circular establishing guidelines for Sukuk products, including registration, disclosure, and reporting requirements. The regulator has also encouraged companies to consider issuing Shari'ah-compliant investment products.

The SEC's Sukuk rules and the PSE's benchmark study address the two sides of an Islamic capital market: the instruments that can be issued and the standard against which compliant investments are measured. The PSE has not disclosed a timetable for the study, so the publication of formal inclusion criteria would be the next step to watch.

— Alexandria Grace C. Magno

Source: BusinessWorld