PenCom Stops PFAs from Investing in Commercial Papers

The National Pension Commission (PenCom) has directed Licensed Pension Fund Administrators (LPFAs) and Custodian Fund to immediately suspend further investment in commercial papers where capital market operators (non-banks) are engaged as IPAS.

This was contained in a circular with reference number: PENCOM/TECH/ISD/2024/402, dated Oct. 23, 2024 and signed by A.M.Saleem, Head, Surveillance Department of PenCom. The circular obtained was addressed to managing directors and chief executives officers of all LPFAs.

PenCom warned the LPFAs to desist from investing in the affected portfolio pending the issuance of guidelines or regulations on the issuance of commercial papers by the Securities and Exchange Commission (SEC).

“PenCom has noted the increased investment by Licensed Pension Fund Administrators (LPFAs) in commercial papers issued by limited liability companies.

“It has also observed that the issuing companies have engaged capital market operators as Issuing and Placing Agents (IPAs) to manage the issuance and placement of these commercial papers.

“However, the commission has become aware that SEC, the regulator of the capital market, currently lack established rules and regulations governing the issuance of commercial papers.

“Consequently, all LPFAs are directed to immediately suspend further investment in commercial papers where capital market operators (non-banks) are engaged as IPAS.

“This is pending the issuance of guidelines or regulations on the issuance of commercial papers by SEC,” the commission said. PenCom further advised the operators to immediately take all necessary measures to ensure full compliance with the circular. #PenCom Stops PFAs from Investing in Commercial Papers Naira Drops Market Wide, Exchange Rates Gap Now N102