The National Pension Commission (PenCom) has lifted the restriction earlier placed on Licenced Pension Funds Administrators investing in commercial papers where capital market operators act as IPAs.
According to a release from the government agency, this is to facilitate capital raising and ensure continued market stability, as the Securities and Exchange Commission (SEC), is addressing PenCom’s concern about the role of nonbank IPAs in Commercial Paper transactions by bringing them within regulatory boundaries.
PenCom had earlier in its circular of 23 October 2024 on the above subject, 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.
PenCom has however, noted that SEC has developed draft rules and an amendment to rule 8 (Exemptions) to regulate the issuance of Commercial Papers by its regulated entities.
Nonetheless, PenCom has warned the LPFAs to 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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