By Sola Alabadan
The National Pension Commission (PenCom) has lifted the restriction on Licensed Pension Fund Administrators (LPFAs) investing in commercial papers where capital market operators act as Issuing and Paying Agents (IPAs), in order to facilitate capital raising and ensure continued market stability.
PenCom had via its circular of 23rd
October 2024 directed all LPFAs to immediately 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.
The Commission informed that the Securities and Exchange Commission (SEC) has now developed draft rules and an amendment to rule 8 (Exemptions) to regulate the issuance of Commercial Papers by it’s regulated entities.
Accordingly, SEC is addressing PenCom’s concern about the role of nonbank IPAs in Commercial Paper transactions by bringing them within regulatory boundaries.
However, PenCom charged 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 Fund Assets.
