National Pension Commission (PenCom), has announced a significant policy update by lifting restrictions on investments in commercial papers by Licensed Pension Fund Administrators (LPFAs) involving non-bank Issuing and Paying Agents (IPAs).
The decision comes against the backdrop of PenCom’s earlier circular dated October 23, 2024, which directed LPFAs to suspended such investments due to the absence of regulatory guidelines governing the role of capital market operators (non banks) as IPAs.
PenCom acknowledged progress made by the Securities and Exchange Commission (SEC), which has developed draft rules and amended Rule 8 ( Exemptions) to regulate the issuance commercial papers by its regulated entities.
These new regulations address PenCom’ s concerns, bringing non- bank IPAs under stricter regulatory oversight to ensure compliance and market stability.
With the regulatory framework now in place, PenCom has lifted the suspension enabling LPFAs to resume investments in commercial papers involving non- bank IPAs.
However, PenCom emphasized the importance of due diligence, directing LPFAs to throughly review all Prospectus and Offer documents inline with Section 2.9 of the Regulation on investment of Pension Fund Assets.
This move aims to balance market stability with increased capital-raising opportunities, reinforcing confidence in the nation’s pension fund investment framework.
