The National Pension Commission (PenCom) has urged pension fund administrators (PFAs) to desist from further investment in commercial papers where capital market operators (non-banks) are engaged as Issuing and placing agents (IPAs).

Commercial papers are short-term debt instruments issued by corporate entities typically to finance short-term liabilities.

This directive was contained in a circular dated October and signed by the Head of the Surveillance Department of the commission.

In the circular, the commission noted that it had observed that the issuing companies have engaged capital market operators as IPAs to manage the issuance and placement of the CPs.

This suspension will remain in place until the Securities and Exchange Commission (SEC) establishes clear guidelines and regulations governing the issuance of commercial papers.

“The Commission has noted the increased investment by Licensed Pension Fund Administrators (LPFAs) in Commercial Papers issued by limited liability companies.

“However, the Commission has become aware that the (SEC), the capital market regulator, currently lacks established rules and regulations governing the issuance of commercial papers,” it said.