Mutual fund industry: AMCs & PFMs allowed to avail conventional or Shariah-compliant facilities

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has allowed the Asset Management Companies (AMCs) and Pension Fund Managers (PFMs) to avail conventional or Shariah-compliant financing facilities to facilitate the mutual fund industry.

In this regard, the SECP has issued circular number 4 of 2026 on Monday on the financing arrangements for Collective Investment Schemes and Pension Funds for a smooth Transition to the T+1 Settlement Cycle.

According to the SECP circular, in order to facilitate a smooth transition of the mutual fund industry to the T+1 settlement cycle, the SECP hereby allows that the Asset Management Companies (AMCs) and the Pension Fund Managers (PFMs) avail conventional or Shariah compliant financing facility (financing facility), if needed, against subscription of units, on behalf of Equity oriented Collective Investment Scheme and/or Equity Oriented Pension Funds (CIS/PF).

This is subject to the following conditions:

The Trustee shall exercise oversight and monitoring to ensure that financing is only availed in cases where a cash requirement has arisen due to subscription requests through banking channels, which may require additional time for clearance and conversion requests from one CIS/PF to another, which need cash management due to the settlement mechanism.

The maximum tenure for the financing facility shall be three (3) working days at market-based competitive rates. The AMC may also utilize its own funds to meet the cash requirement of CIS/PF, without charging any cost to the CIS/PF, on reimbursement basis, subject to the conditions provided in this Circular; The AMCs/PFMs are allowed to pledge the securities of the respective CIS/PF to avail the financing facility; The daily amount of any financing facility availed shall not exceed the lower of ten percent (10 percent) of the total net assets of the respective CIS/PF as on the preceding business day, or cash shortfall arising from uncleared banking instruments and conversion requests received on that day.

The AMCs/PFMs shall disclose complete details of financing facility i.e. cost charged to CIS/PF, amount of financing facility availed and duration in the Fund Manager Report for that month.

Trustee shall forthwith report any non-compliance or inconsistency to the Commission.

The AMCs/PFMs shall submit a fortnightly report for respective CIS/PF as per the format to the Trustee and the Commission.

Copyright Business Recorder, 2026