By Abigail Philip David
The National Pension Commission (PENCOM) has lifted the suspension on Pension Fund Administrators (PFAs) regarding investments in commercial papers.
In a circular issued on Tuesday, PENCOM explained that the decision was based on the draft rules issued by the Securities and Exchange Commission (SEC) governing such investments. Abdulqadir Dahiru, Head of PENCOM’s Investment Supervision Department, who signed the circular, noted that SEC had developed draft rules and amendments to Rule 8 (Exemptions), which address the role of non-bank Issuing and Paying Agents (IPAs) in commercial paper transactions.
The SEC’s efforts to bring these entities under regulatory oversight prompted PENCOM to remove its restriction, allowing Licensed Pension Fund Administrators (LPFAs) to invest in commercial papers where capital market operators serve as IPAs. This move is aimed at facilitating capital raising and maintaining market stability.
However, PENCOM emphasized that PFAs must conduct proper legal and financial due diligence on the prospectuses and offer documents of all commercial papers before making investments, as outlined in Section 2.9 of the Pension Fund Asset Investment Regulation.
