The Securities and Exchange Commission of Pakistan (SECP) has announced new regulations aimed at enhancing the mutual fund industry’s framework by introducing detailed requirements for “Investment Plans.”

This initiative built on earlier amendments to the Non-Banking Finance Companies and Notified Entities Regulations, 2008 (NBFC Regulations).

The new framework is designed to improve governance, streamline operations, and ensure secure investment opportunities, thereby promoting greater retail participation in the mutual fund sector.

Developed after extensive consultations with stakeholders, including the Mutual Funds Association of Pakistan (MUFAP), the requirements align with best practices and ensure compliance with established principles.

Key features of the new regulations included the specification of eligible categories of Collective Investment Schemes (CIS) that asset management companies (AMCs) can offer.

These categories encompassed various investment plans such as fund of funds, fixed rate/return schemes, sovereign income, asset allocation schemes, capital-protected funds, and exchange-traded funds.

Operational guidelines provided clarity on the maximum number of investment plans, their duration, exposure limits, investment restrictions, and performance benchmarks. To enhance transparency, the framework mandated specific disclosures for fund of fund CIS and additional risk information.

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Furthermore, the regulations outline essential offering guidelines, including subscription timelines and net asset value (NAV) announcements, and detail provisions for total expense ratios, formation costs, and other charges.