SECP establishes regulatory framework for investment schemes
The Securities and Exchange Commission of Pakistan (SECP) has enhanced the regulatory framework for the mutual fund sector by delineating comprehensive standards for “Investment Plans.”
This initiative is founded on the facilitating measures previously established by revisions to the Non-Banking Finance Companies and Notified Entities Regulations, 2008 (NBFC Regulations), according to a press release.
The framework seeks to improve governance, optimize operations, and provide secure investment opportunities while promoting retail engagement in the mutual fund sector.
The new rules were formulated following comprehensive consultations with stakeholders, including the Mutual Funds Association of Pakistan (MUFAP), to conform to best practices and guarantee adherence to established principles.
These standards delineate the qualifying categories of Collective Investment Schemes (CIS) under which Asset Management Companies (AMCs) may present investment plans, encompassing fund of funds, fixed rate/return, sovereign income, asset allocation schemes, capital protected funds, and exchange traded funds.
Operational criteria delineate explicit parameters for the maximum quantity of investment plans, their duration, exposure thresholds, investment limitations, and performance standards. The framework requires explicit disclosures for fund of fund collective investment schemes (CIS) and supplementary risk information to enhance transparency.
It delineates critical offering parameters, encompassing subscription timelines and NAV releases, and stipulates comprehensive rules for the total expense ratio, formation costs, and other charges.
The framework aims to safeguard investors by mandating extensive disclosures and implementing organized operational norms, thereby reinforcing the SECP’s dedication to promoting a transparent, efficient, and investor-centric atmosphere in the mutual fund sector.
The SECP is dedicated to cultivating a favorable environment for the mutual fund sector, enhancing business facilitation, and expanding access to innovative and regulated financial products.