The National Pension Commission (PenCom) has lifted the restriction on Licenced Pension Fund Administrators (LPFAs) investing in commercial papers where capital market operators act as Issuing and Paying Agents (IPAs).
PenCom in a circular said the decision seeks to facilitate capital raising and ensure continued market stability.
The commission had earlier in a circular dated 23 October 2024 directed all Licensed Pension Fund Administrators to immediately suspend further investment in commercial papers where capital market operators (non-banks) are engaged as IPAs due to the absence of rules governing the issuance.
However, PenCom stated that it has noted that the Securities and Exchange Commission (SEC) has developed draft rules and an amendment to rule 8 (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. Consequently, PenCom lifted the restriction but insists 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 Section 2.9 of the Regulation on Investment of Pension Fund Assets.
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