SECP gives permission to commodity schemes
Investors to get access to pooled investments.
ISLAMABAD:
The Securities and Exchange Commission of Pakistan (SECP) has allowed asset management companies (AMCs) to offer commodity schemes to investors, said a press release issued here on Tuesday by the SECP.
SECP’s decision to allow a new category of commodity funds will enable small investors to take advantage of gains in commodities such as gold through pooled investments managed by professional fund managers.
The SECP has also devised the minimum requirements for a commodity scheme after thorough consultation with market participants and in accordance with international practices. As per the prescribed requirements, investment in commodities by a fund can only be made through future contracts which are traded on an organised exchange such as the Pakistan Mercantile Exchange and have commodities as the underlying assets.
Commodity funds are required to invest at least 70% of their assets in commodity futures contracts, which include both cash-settled and deliverable contracts. Deliverable contracts, for the time being, have only been allowed in gold. In order to ensure sufficient liquidity, commodity schemes must maintain at least 10% of their net assets in cash and near cash instruments.
Furthermore, such schemes have been prohibited from gearing or leveraging. For managing a commodity scheme, fund managers are required to have the requisite infrastructure and skilled human resources.
Published in The Express Tribune, October 24th, 2012.
The Securities and Exchange Commission of Pakistan (SECP) has allowed asset management companies (AMCs) to offer commodity schemes to investors, said a press release issued here on Tuesday by the SECP.
SECP’s decision to allow a new category of commodity funds will enable small investors to take advantage of gains in commodities such as gold through pooled investments managed by professional fund managers.
The SECP has also devised the minimum requirements for a commodity scheme after thorough consultation with market participants and in accordance with international practices. As per the prescribed requirements, investment in commodities by a fund can only be made through future contracts which are traded on an organised exchange such as the Pakistan Mercantile Exchange and have commodities as the underlying assets.
Commodity funds are required to invest at least 70% of their assets in commodity futures contracts, which include both cash-settled and deliverable contracts. Deliverable contracts, for the time being, have only been allowed in gold. In order to ensure sufficient liquidity, commodity schemes must maintain at least 10% of their net assets in cash and near cash instruments.
Furthermore, such schemes have been prohibited from gearing or leveraging. For managing a commodity scheme, fund managers are required to have the requisite infrastructure and skilled human resources.
Published in The Express Tribune, October 24th, 2012.