By Niyi Jacobs
The National Pension Commission (PenCom) has lifted its suspension on Licensed Pension Fund Administrators (LPFAs) investing in commercial papers where non-bank capital market operators act as Issuing and Paying Agents (IPAs).
This decision follows the Securities and Exchange Commission’s (SEC) development of regulatory frameworks to address concerns about the involvement of non-bank operators in such transactions.
In a circular issued on December 3, 2024, PenCom noted that SEC’s newly proposed rules and amendments to Rule 8 (Exemptions) provide a robust regulatory structure for commercial paper issuances. This addresses PenCom’s earlier apprehensions regarding potential risks to pension fund assets caused by the absence of clear guidelines.
The lifted suspension is expected to facilitate capital raising and ensure market stability, enabling LPFAs to resume investments in commercial papers under stricter due diligence requirements. PenCom reiterated the necessity for LPFAs to comply with its Regulation on Investment of Pension Fund Assets, emphasizing that comprehensive legal and financial reviews of all prospectuses and offer documents are mandatory.
Key Developments
The restriction on LPFAs investing in commercial papers involving non-bank IPAs has been officially lifted.
SEC’s regulatory updates aim to enhance transparency and mitigate risks in commercial paper transactions.
LPFAs must adhere to stringent due diligence practices as outlined in PenCom’s investment regulations.
This move comes as Nigeria’s financial markets increasingly rely on capital markets to fund corporate and government projects, with PenCom urging LPFAs to prioritize the safety of pensioners’ funds in their
