By Victoria Onehi
The National Pension Commission (PenCom) has lifted the restriction on Licensed Pension Fund Administrators(LPFAs) to investing in commercial papers where capital market operators act as Issuing and Paying Agents (IPAs).
PenCom disclosed that this is to facilitate capital raising and ensure continued market stability.
The National Pension Commission (PenCom) in a circular of 23 October 2024 had directed all Licensed Pension Fund Administrators(LPFAs) to immediately suspend further investment in commercial papers where capital market operators (non-banks) are engaged as Issuing and paying Agents (IPAs) due to the absence of rules governing the issuance.
However, PenCom has noted that SEC has developed draft rules on and an amendment to rule (Exemptions) to regulate the issuance of Commercial Papers by its regulated entities.
Accordingly, SEC is addressing PenCom’s concern about the role of non-bank IPAs in Commercial Paper transactions by bringing them within regulatory boundaries.
A circular issued by PenCom reads in part:
“Consequently,to facilitate capital raising and ensure continued market stability,PenCom has lifted the restriction on LPFAs investing in commercial papers where capital market operators act as IPAs.
“Nonetheless,LPFAs must ensure that appropriate legal and financial due diligence are undertaken on all Prospectus/Offer Documents of all commercial papers prior to investment as stipulated in Section2.9 of the Regulation on Investment of Pension Fund Assets.”
