The National Pension Commission (PenCom) has lifted its suspension on investments in commercial papers by Licensed Pension Fund Administrators (LPFAs) when non-bank capital market operators serve as Issuing and Paying Agents (IPAs).
This decision was made after the Securities and Exchange Commission (SEC) resolved regulatory issues about the role of non-bank operators in commercial paper transactions.
The suspension was originally put in place because there were no clear rules about how non-bank IPAs should be involved in issuing commercial papers.
However, since the SEC has created draft rules and suggested changes to Rule 8 (Exemptions), PenCom has decided to lift the ban.
On December 3, 2024, PenCom announced in a circular that the SEC has created new draft rules and suggested changes to oversee the issuance of commercial papers by companies it regulates. The SEC’s actions aim to address PenCom’s worries about non-bank financial institutions playing a role in commercial paper transactions.
As a result, PenCom has removed its ban on LPFAs investing in commercial papers when non-bank capital market operators act as financial intermediaries. However, PenCom stressed that LPFAs must thoroughly check all legal and financial aspects of the Prospectus/Offer Documents for commercial papers before making any investments.
This change is expected to make it easier for companies to raise capital in Nigeria’s financial markets, while still protecting the safety and stability of pension fund assets.
