The National Pension Commission (PenCom) reinstates investments in commercial papers by Licensed Pension Fund Administrators (LPFAs) involving non-bank capital market operators as Issuing and Paying Agents (IPAs).
This follows steps taken by the Securities and Exchange Commission (SEC) to address regulatory concerns regarding the role of non-bank IPAs in commercial paper transactions.
In a circular dated December 3, 2024, signed by Abdulqadir M. Dahiru, Head of PenCom’s Investment Supervision Department, the Commission reverses its October 2024 suspension. The earlier directive was issued due to the lack of clear regulatory guidelines, which PenCom flagged as a risk to pension fund investments.
PenCom explains that the SEC has introduced draft regulations and amendments to Rule 8 to oversee commercial paper issuances by its regulated entities. These changes ensure that non-bank IPAs operate within a defined regulatory framework, addressing concerns about their role in such transactions.
The circular states, “To support capital-raising efforts and maintain market stability, the Commission lifts restrictions on LPFAs investing in commercial papers where capital market operators act as IPAs. However, LPFAs must conduct comprehensive legal and financial due diligence on all prospectuses or offer documents as outlined in Section 2.9 of the Regulation on Investment of Pension Fund Assets.”
- LPFAs are now authorized to invest in commercial papers involving non-bank IPAs, provided they comply with due diligence requirements.
- Administrators must ensure all prospectuses and offer documents undergo thorough scrutiny to safeguard pension fund assets.
- The SEC’s new regulations promote transparency and financial stability in commercial paper transactions.
This decision aims to enhance capital-raising activities in Nigeria’s financial markets while maintaining the integrity of pension fund investments.
In October 2024, PenCom ordered LPFAs to suspend investments in commercial papers involving non-bank IPAs. This action, outlined in a circular signed by A.M. Saleem, Head of PenCom’s Surveillance Department, was to ensure the safety of pension assets pending new SEC guidelines. With these regulatory updates in place, PenCom now restores confidence in the investment process.
 reinstates investments in commercial papers by Licensed Pension Fund Administrators (LPFAs) involving non-bank capital market operators as Issuing and Paying Agents (IPAs).){kind=link}