SECP launches strategic steps to transform mutual funds industry

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has taken several strategic initiatives to strengthen Pakistan’s mutual funds industry. These measures included the registration of the Mutual Funds Association of Pakistan (MUFAP) as a Self-Regulatory Organization (SRO), the approval of a comprehensive Digital Asset Management Companies (Digital AMC) Framework, and the formation of a committee for the development of Exchange Traded Funds (ETFs) in Pakistan. These steps aim to facilitate market development, enhance investor confidence, improve transparency, and promote financial inclusion.

By being recognized as an SRO, the MUFAP will now play a pivotal role in industry development, investor education, and self-regulating the business conduct of the mutual fund sector.

The MUFAP’s expanded mandate includes promoting ethical practices and professional competence within the industry, conducting and sharing research, assisting in the development of industry standards aligned with global best practices, overseeing compliance through inspections, arbitrating disputes, and supporting financial inclusion, investor outreach, and education while implementing measures for investor protection.

Additionally, the MUFAP will review constitutive documents such as trust deeds and offering documents, undertake standardized industry documentation and reporting, and ultimately lay the groundwork for a more responsive, transparent, and investor-friendly mutual fund ecosystem.

The approval of the Digital AMC Framework will enable technological innovation, broaden market access, and foster industry growth by reducing entry barriers, expanding retail participation, and providing end-to-end digital access to mutual fund investments.

Furthermore, the committee for ETF development has been tasked with reviewing the existing framework and international best practices to recommend reforms aimed at increasing investor participation and eliminating inefficiencies hindering the growth of this segment.

Recently, the SECP hosted a Mutual Funds Industry Focus Group Session, bringing together key stakeholders and industry professionals.

The session gathered input on strategic priorities, including expanding infrastructure finance through mutual funds, enhancing liquidity management and governance, and modernizing distribution models. It also addressed structural and cultural barriers to women’s financial inclusion and explored the promotion of Systematic Investment Plans (SIPs) as a tool for disciplined, long-term savings. A White Paper summarizing the session’s outcomes, along with a roadmap for implementing key recommendations, has been approved by the Commission for circulation.

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