Nigeria: PenCom Halts PFAs’ Investments in Commercial Papers Amid Regulatory Concerns

The National Pension Commission (PenCom) has instructed Licensed Pension Fund Administrators (LPFAs) and Custodian Fund managers to suspend any further investments in commercial papers facilitated by non-bank capital market operators acting as Issuing and Placing Agents (IPAs).

This directive was issued through a circular (Ref. No. PENCOM/TECH/ISD/2024/402) dated October 23, 2024, signed by A.M. Saleem, Head of PenCom’s Surveillance Department, and addressed to the managing directors and CEOs of all LPFAs.

PenCom noted that recent investments by LPFAs in commercial papers issued by limited liability companies have increasingly involved IPAs, which are not regulated under existing SEC guidelines. The circular cautioned LPFAs against new investments in these instruments until the Securities and Exchange Commission (SEC) formalizes clear regulations for commercial paper issuance.

“PenCom has observed a rise in LPFAs’ investment in commercial papers managed by capital market operators as IPAs. However, SEC currently lacks established rules governing such issuances,” PenCom stated in the circular.

The commission emphasized that this directive is effective immediately, pending the SEC’s release of comprehensive regulations. PenCom further advised LPFAs to take all necessary measures to ensure strict adherence to the suspension order.