In a circular referenced PENCOM/TECH/ISD/2024/402, dated October 23, 2024, from A.M. Saleem, Head of the Surveillance Department, addressed to the Managing Directors and Chief Executive Officers of all LPFAs, PenCom cautioned these entities against investing in the specified portfolio until guidelines or regulations regarding the issuance of commercial papers are established by the Securities and Exchange Commission (SEC).
The circular states, "PenCom has observed a rise in investments by LPFAs in commercial papers issued by limited liability companies. It has also noted that these companies have engaged capital market operators as IPAs to oversee the issuance and placement of these commercial papers."
However, the commission pointed out that the SEC, as the capital market regulator, currently does not have defined rules and regulations for the issuance of commercial papers.
As a result, all LPFAs are mandated to immediately cease further investments in commercial papers involving capital market operators (non-banks) acting as IPAs, pending the release of guidelines or regulations from the SEC.
The commission urged operators to take all necessary actions to ensure complete adherence to this directive.