SECP Bolsters Mutual Funds Industry with Strategic Measures

The Securities and Exchange Commission of Pakistan (SECP) has undertaken several key initiatives aimed at reinforcing the country’s mutual funds sector. These actions encompass the registration of the Mutual Funds Association of Pakistan (MUFAP) as a Self-Regulatory Organization (SRO), the authorization of a detailed Digital Asset Management Companies (Digital AMC) Framework, and the establishment of a committee focused on advancing Exchange Traded Funds (ETFs) within Pakistan. These endeavors are designed to promote market growth, boost investor assurance, enhance clarity, and encourage greater financial participation.

With its recognition as an SRO, MUFAP is poised to assume a crucial position in fostering industry progress, educating investors, and ensuring ethical business practices throughout the mutual fund landscape.

MUFAP’s broadened responsibilities include championing ethical conduct and professional excellence within the sector, spearheading and disseminating research findings, aiding in the creation of industry benchmarks that align with international best practices, guaranteeing adherence through audits, mediating conflicts, and backing financial inclusion, investor engagement, and educational programs, all while implementing safeguards for investor interests.

Moreover, MUFAP will assess foundational documents like trust deeds and offering prospectuses, standardize industry documentation and reporting, and ultimately pave the way for a more transparent, responsive, and investor-centric mutual fund environment.

The approval of the Digital AMC Framework is expected to stimulate technological advancements, broaden market reach, and stimulate industry expansion by lowering obstacles to entry, increasing retail involvement, and delivering comprehensive digital access to mutual fund investments.

In addition, the ETF development committee is charged with scrutinizing the current framework and global leading practices to propose reforms aimed at increasing investor involvement and resolving inefficiencies that impede the expansion of this sector.

SECP recently conducted a Mutual Funds Industry Focus Group Session, uniting prominent stakeholders and industry experts.

The session served as a platform to gather insights on strategic priorities, including expanding infrastructure finance via mutual funds, refining liquidity management and governance practices, and modernizing distribution approaches. It also tackled structural and cultural impediments to women’s financial engagement and explored the advancement of Systematic Investment Plans (SIPs) as a tool for consistent, long-term savings. A White Paper summarizing the session’s conclusions, alongside a plan for enacting key recommendations, has been endorsed by the Commission for distribution.