By Dada Akintoun
The National Pension Commission (PenCom) has directed Pension Fund Administrators (LPFAs) to suspend further investment in commercial papers where capital market operators (non-banks) are engaged as IPAS.
Commercial papers are short-term debt instruments issued by corporations typically used to finance short-term liabilities.
This was contained in a circular with Reference number: PENCOM/TECH/ISD/2024/402, dated Oct. 23, 2024, and signed by the Head, Surveillance Department of the commission.
In the circular, the commission 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 Securities and Exchange Commission (SEC) establishes clear guidelines and regulations governing the issuance of commercial papers.
“The Commission has noted the increased investment by Licensed Pension Fund Administrators (LPFAs) in Commercial Papers issued by limited liability companies,” it stated in a recent release by the commission.
“However, the Commission has become aware that the (SEC), the regulator of the capital market, currently lacks established rules and regulations governing the issuance of commercial papers,” it said. Operators are advised to immediately take all necessary measures to ensure full compliance with this circular.
