SECP specifies rating requirements for investment in short-term instruments by CISs

SECP

ISLAMABAD, Jun 2 (APP): The Securities and Exchange Commission of Pakistan (SECP) has specified rating requirements for investment in short-term debt instruments by open-ended collective investment schemes (CISs) aimed at protecting unitholders’ investment in various schemes launched by asset management companies (AMCs) and improving transparency and efficiency.

“The new requirements have been notified through Circular No. 9 of 2023, which is available at https://www.secp.gov.pk/document/circular-no-9-of-2023-short-term-rating-requirements-for-cis/?wpdmdl=47944&refresh=6479d45fa814f1685705823,” the SECP said in a news release on Friday.

The SECP said the requirements had been introduced through amendments in earlier issued Circular No. 7 of 2009 (Categorization of Open-End Collective Investment Schemes). “The amendments were made in consultation with Mutual Fund Association of Pakistan (MUFAP), Pakistan Credit Rating Agency Limited (PACRA) and VIS Credit Rating Co. Limited (VIS).”

Through the amendments, the SECP said the credit rating of any short-term security in the portfolio of money market scheme would not be lower than A1 (A One), whereas, in the case of income schemes, the rating of any short-term security in the portfolio would not be lower than A 3 (A Three).

Further, in the case of the Shariah Compliant (Islamic) Scheme, the rating of short-term instruments in the portfolio would not be lower than A 2 (A Two), it said.

Likewise, in case of the Balanced Scheme, the rating of any short-term debt security in the portfolio would not be lower than A 2 (A Two).

“The AMCs whose open-ended CISs have already taken exposure in below rated short term debt instruments shall comply with the requirement within a period of six (6) months from the date of publication of the Circular.”

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