A consultation paper has been published by the Securities and Exchange Commission of Pakistan (SECP) suggesting various alterations to the total expense regime (TER) and distribution paradigm for mutual funds and pension funds. Aimed to reduce the burden on retail investors, these suggestions optimize their returns, inculcate better saving habits, and increase retail penetration. In order to solicit public feedback and comments from stakeholders, the consultation paper was made available on SECP's website. The paper reviews the current regime in three parts, i.e., the TER framework for mutual funds, the TER of pension funds, and a review of distribution models. While evaluating the current TER frameworks for mutual and pension funds, the paper suggests alterations to reduce the financial burden on investors, enhance their long-term returns, and guarantee equity and transparency in the expenses of fund managers.
The problems that have impeded the growth of the distribution network and affected retail penetration are discussed in the third part of the paper. Further, it recommends a transformative framework to revamp the distribution model and improve its usability and accessibility for average investors. The proposed changes are designed to align with international best practices and ensure that pension fund participants receive the maximum value from their savings. SECP requests public feedback in order to introduce regulatory changes aimed at creating a more efficient, transparent, and equitable system that better meets the needs of investors. Interested stakeholders may send their comments and feedback at fmd.feedback@secp.gov.pk. The consultation paper can be accessed at https://www.secp.gov.pk/document/mutual-fund-for-masses-consultation-paper/?wpdmdl=52402&refresh=66a74953a69711722239315
Credit: Independent News Pakistan