Investors of Private Fund Management Company: SECP issues new 'Investment Policy Statement Notice'

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued a new 'Investment Policy Statement Notice' for investors of the Private Fund Management Company.

According to the Investment Policy Statement Notice issued by the SECP here on Friday, the Private Fund Management Company is bound to disclose any information that may be necessary for eligible investors to make an informed judgment.

Under the category of Financial Sector Knowledge and Experience, the SECP specified that in determining eligible investor's financial sector knowledge and experience following shall be considered:

The investor's qualification, knowledge and understanding of the relevant financial market, types of financial products or arrangements and the risks involved. The length of time the investor has participated in relevant financial markets; and frequency of dealings and the extent to which the investor has relied on the financial advice from the investment service providers.

The Investment Policy Statement Notice would also cover the Risk Tolerance. Within the category of Risk Tolerance, in determining eligible investor's risk tolerance following shall be considered: Relevance of a private fund in which investor intends to make investment. The size and nature of transactions that have been undertaken by the investor in relevant financial markets.

The composition and size of the investor's existing investment portfolio, if any. Any specific objective that investor intends to achieve through investment in this Private Fund.

The investor's tolerance for risk i.e. both ability and willingness of client to bear risk and return objectives. The liquidity requirements if any in the near future and time horizon for investment in relation to specific security and overall portfolio and investor's tolerance on borrowing or leverage by the private fund selected for investment.

The Risk Tolerance also covers the tax or legal consideration which in future might affect investor's investment decision and other unique circumstances, matters or aspects of investor which the Private Fund Management Company considers relevant, SECP added.

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