SECP Enhances Mutual Funds Industry Through Strategic Initiatives

The Securities and Exchange Commission of Pakistan (SECP) has implemented several key initiatives to bolster 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 panel to advance Exchange Traded Funds (ETFs) locally. The purpose of these measures is to foster market growth, boost investor assurance, improve clarity, and broaden financial participation.

With its recognition as an SRO, MUFAP is poised to be central in nurturing the industry, educating investors, and autonomously overseeing business practices within the mutual fund arena.

MUFAP’s newly broadened responsibilities include encouraging ethical conduct and professional expertise, undertaking and disseminating research, aiding in creating industry benchmarks in line with leading global practices, supervising adherence through audits, mediating disagreements, and endorsing financial inclusion, investor engagement, and education, all while reinforcing investor safeguards.

MUFAP will also assess foundational documents like trust deeds and offering circulars, standardize industry documentation and reporting, and ultimately pave the way for a more transparent and accessible mutual fund environment that prioritizes investors.

The approved Digital AMC Framework is set to stimulate technological advances, expand market reach, and encourage sector expansion by lowering obstacles to entry, increasing involvement from retail investors, and enabling comprehensive digital access to mutual fund investments.

The ETF development committee is charged with reassessing the current framework and global best practices to propose changes aimed at driving higher investor engagement and eliminating inefficiencies that impede growth in this area.

The SECP recently organized a Mutual Funds Industry Focus Group Session, uniting vital stakeholders and professionals from the field.

The session compiled insights on crucial priorities, such as growing infrastructure funding through mutual funds, refining liquidity management and governance, and innovating distribution strategies. It also examined structural and cultural barriers affecting women’s financial participation and explored the advancement of Systematic Investment Plans (SIPs) as a means for disciplined, long-term saving. A White Paper summarizing the session’s findings, including a plan for enacting key proposals, has been endorsed by the Commission for distribution.