SECP to allow NBFCs to launch digital fund management, lending and trustee services

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) will allow the Non-Banking Finance Companies (NBFCs) to launch digital fund management, lending, and trustee services.

Through an SRO 423(I)/2023 issued on Wednesday, the SECP has proposed amendments in the Non-Banking Finance Companies and Notified Entities Regulations, 2008 to facilitate adoption of new technologies, improve ease of doing business and enhance investor protection. The draft amendments have been placed on SECP’s website for public consultation.

Provisions also include to enable Asset Management Companies (AMCs) to promptly notify unitholders of account activity and maintain confidentiality of client information. Redundant and superfluous provisions were also removed.

Additionally, the 100% equity cap on total unsecured exposure has been eliminated. Lending NBFCs that have recently received licenses have been given a year to meet the minimum investment requirement in their primary business.

Investment Advisors can now provide portfolio management services to all investors in accordance with global best practices, as are countries like Canada, India, and Malaysia. The deadline for submitting CEO applications has been increased from 10 to 30 days.

Furthermore, enabling provisions have been introduced to allow certain financial institutions to distribute units of CIS/VPS without obtaining a license, subject to compliance with S&FA Regulations.

According to the revised regulations, the SECP has also directed the Non-Banking Finance Companies (NBFCs) to formulate Corporate Governance and Proxy Voting policies to strengthen the regulatory regime of these companies.

An Asset Management Company shall put in place, appropriate policies and procedures, approved by its board of directors, which govern trading or investment in securities by the AMC employees, their spouse(s) and dependent children and directors and their spouse(s) and dependent children if such directors are privy to investment committee consultations

or decision.

Copyright Business Recorder, 2023