BY NKECHI NAECHE- ESEZOBOR— The National Pension Commission (PenCom) on Tuesday lifted the suspension it placed on investment in commercial papers by Pension Fund Administrators (PFAs), where capital market operators (non-banks) are
engaged as Issuing and Paying Agents (IPAs) due to the absence of rules governing the issuance.
The commission in a statement released today said “PenCom noted that SEC has developed draft rules and an amendment to rule 8 (Exemptions) to regulate the issuance of Commercial Papers by its regulated entities.
“Accordingly, SEC is addressing PenCom’s concern about the role of non-bank IPAs in Commercial Paper transactions by bringing them within regulatory boundaries.
“Consequently, to facilitate capital raising and ensure continued market stability, PenCom has lifted the restriction on LPFAs investing in
commercial papers where capital market operators act as IPAs.
“Nonetheless, LPFAs must ensure that appropriate legal and financial due
diligence are undertaken on all Prospectus/offer Documents of all commercial papers prior to investment as stipulated in Section 2.9 of the egulation on Investment of Pension Fund Assets.”
The commission had in late October, 2024 halted investments in Commercial Papers (CPs) issued by limited liability companies by Licensed Pension Fund Administrators (LPFAs).
Commercial papers are an short-term debt instrument issued by corporations typically used to finance short-term liabilities. directed PFAs
PenCom noted that it had observed that the issuing companies have engaged capital market operators as Issuing and Placing Agents (IPAs) to manage the issuance and placement of these Commercial Papers. This suspension will remain in place until the SEC establishes clear guidelines and regulations governing the issuance of commercial papers.
