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

PenCom in a circular with Reference number :PENCOM/TECH/ISD/2024/402, dated October 23, 2024 by Head, Surveillance Department of PenCom, A.M.Saleem, addressed to Managing Directors and Chief Executives Officers of all LPFAs, 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.

According to the circular, "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 is aware that SEC, the regulator of the capital market, currently lacks 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 advised the operators to immediately take all necessary measures to ensure full compliance with the circular.