PenCom lifts restrictions on LPFAs investments in commercial papers

The National Pension Commission (PenCom) has lifted the restrictions placed on all Licensed Pension Fund Administrators (LPFAs) over investment in commercial papers where capital market operators (non-banks) are engaged as Issuing and Paying Agents (IPAs) without rules governing the issuance.

PenCom stated this in a document entitled: ‘Investments in Commercial Papers by Licenced Pension Fund’ which was made available to Inspenonline, adding that referring to its circular of 23 October 2024 on the above subject, in which it 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, 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, the pension industry regulator submitted.

It maintained that consequently, to facilitate capital raising and ensure continued market stability, it 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 Section 2.9 of the

Administrators Regulation on Investment of Pension Fund Assets, PenCom said.