The National Pension Commission (PenCom) has lifted restrictions on Licensed Pension Fund Administrators (LPFAs) investing in commercial papers where capital market operators act as Issuing and Paying Agents (IPAs).
This decision was announced through a circular issued by the commission on Tuesday in Abuja.
According to the circular, the Securities and Exchange Commission (SEC) has developed draft rules and amendments to regulate the issuance of commercial papers by its regulated entities.
The SEC has addressed PenCom’s concerns about the role of non-bank IPAs in commercial paper transactions by bringing them within regulatory boundaries.
To facilitate capital raising and ensure continued market stability, PenCom had lifted the restriction on LPFAs investing in commercial papers where capital market operators act as IPAs.
However, LPFAs must ensure that they undertake appropriate legal and financial due diligence on all Prospectus/Offer Documents of commercial papers prior to investment, as stipulated in Section 2.9 of the Regulation on Investment of Pension Fund Assets.
This decision follows PenCom’s directive in October for LPFAs to suspend further investment in commercial papers where capital market operators (non-banks) are engaged as IPAs due to the absence of rules governing the issuance.