The Securities and Exchange Commission of Pakistan (SECP), vide S.R.O. 350 (I)/2011 dated May 5, 2011, has proposed certain amendments to the NBFC and Notified Entities Regulations, 2008 (the ‘Regulations’) and have also placed these amendments on its website to solicit comments from the public and concerned quarters. While allowing operational flexibility to fund managers, measures have also been introduced to ensure investor protection. It is a step forward by the regulator for a more conducive regulatory framework to help the industry participants to benefit from growth opportunities.
The significant amendments encompass the replacement of seed capital requirements with minimum fund size to offer flexibility to fund managers in launching new mutual funds. In addition, it restricts annual equity brokerage paid by a mutual fund to a single broker to 10 percent of its total brokerage expense for promoting competitive brokerage services. Besides minimising concentration risk posed to mutual funds, such measures also aim at encouraging other financial market participants to benefit from the diversified brokerage services rather than routing bulk transactions through single or a few brokers.
It also aims to empower unit holders for decisions on material aspects of a mutual fund including transfer of its management rights as well as the enhancement of role of trustees of mutual funds to ensure better safeguarding of unit holder interests and prohibiting them from investing in mutual funds for which they act as trustee. PRESS RELEASE