Islamabad: The Securities and Exchange Commission of Pakistan (SECP) is taking decisive steps to improve cost efficiency and transparency in the mutual funds sector while also working to increase liquidity in Exchange Traded Funds (ETFs). In a recent meeting, SECP Chairperson Akif Saeed engaged with senior officials from Asset Management Companies, the Central Depository Company of Pakistan, and the Mutual Funds Association of Pakistan to discuss these initiatives.
The discussion centered on the potential benefits of outsourcing certain mutual fund functions to specialized service providers. This approach aims to cut costs, standardize user experiences, and improve transparency, particularly in areas such as Net Asset Value calculations. By leveraging financial technology, the mutual funds industry could focus more on core activities like fund management and expand investor outreach. This strategy aligns with the SECP’s vision of making mutual funds more accessible to the general public and lowering entry barriers for new market players.
To further this initiative, a working group has been formed. Comprising members from the SECP, market participants, trustees, and fintech firms, the group will conduct a detailed review of the proposal. They are tasked with engaging stakeholders, analyzing technological impacts, including blockchain advancements, and delivering recommendations within 60 days.
In addition to mutual funds, the meeting addressed the need for increased liquidity in ETFs. Recognized for their ability to replicate returns from multiple securities at a low cost, ETFs are critical to expanding investor outreach. The SECP has previously established a committee with various market participants to tackle practical issues hindering ETF growth. The committee has identified challenges such as large lot sizes and inefficient distribution and is preparing a report with proposed solutions. The SECP has pledged full support for implementing these recommendations.
The meeting concluded with a shared commitment to drive product innovation, efficiency, and transparency, and to enhance investor engagement through mutual support and collaboration.