The Securities and Exchange Commission of Pakistan (SECP) has released guidelines on mutual fund digital platforms and confirmed that the first licensed digital distribution platform will go live this month with several others on the way.
The guidelines are part of the regulator’s efforts to broaden the investor base through fintech and digitalization initiatives. Pakistan has a thriving Islamic funds sector, with some of the best performing Shariah mutual funds in the region and abroad; and the new regulation could be a boon to the segment.
“Digital distribution platforms will act like a one-stop shop that allows investors, financial advisors and wealth managers to select a range of different retail investment products from a single point of contact in a timely, efficient and transparent manner. These online platforms help individual investors to identify and compare various financial products that are offered in the marketplace and choose the one that best suits their investment objective and risk profile,” according to the SECP.
The first SECP-licensed online distribution platform is expected to go live mid-June. Two more are currently undergoing advanced testing as part of the first cohort of SECP’s regulatory sandbox, the regulator confirmed.
“These technology platforms will expand the range of investment products to investors but also allow them to make more informed decisions. These guidelines provide principles for design, information dissemination, risk management, governance, suitability assessment, client profiling, system security protocol, issuance/redemption of funds, complaint handling, etc for digital distributors including distributors offering robo-advisory services,” the SECP explained.