The National Pension Commission (PenCom) has lifted its suspension on investments in commercial papers by Licensed Pension Fund Administrators (LPFAs) where non-bank capital market operators act as Issuing and Paying Agents (IPAs).
The commission took the decision as Securities and Exchange Commission (SEC) has stepped in by developing draft rule and amendment to rule 8 exemptions to regulate the issuance of Commercial papers by its regulated equities.
In a circular issued on December 3, 2024 posted on its website and signed by the Commission’s Head of the Investment Supervision Department, PenCom, Abdulqadir M. Dahiru, referenced its earlier directive, which called for an immediate halt on such investments.
The apex regulators of the capital market also address regulatory concerns about the role of these non-bank IPAs in commercial paper transactions by bringing them within regulatory boundaries.
The Commission placed the suspension due to the lack of clear regulatory guidelines governing the involvement of non-bank IPAs in commercial paper issuances. The Commission raised concerns that the absence of rules from the SEC left these transactions outside established regulatory frameworks, potentially exposing pension fund investments to unnecessary risks.
The commission, however, said that the restriction was lifted to facilitate capital raising and ensure continued market stability.
It however urged the LPFAs to 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 regulation on investment of pension funds’ asse
