SECP floats Swing Pricing mechanism for mutual funds

April 16, 2026 (MLN): The Securities and Exchange Commission of Pakistan (SECP) has put forward a proposal to introduce a new system, “Swing Pricing,” aimed at making mutual fund investments more equitable and transparent.

The regulator has issued a consultation paper and invited comments from stakeholders before finalizing the proposal.

The initiative seeks to address concerns about how transaction-related costs are currently distributed among investors, according to a press release issued.

During periods of sudden market movements often triggered by economic or political developments investors tend to simultaneously withdraw funds, make fresh investments, or switch between options.

 This surge in activity compels fund managers to rapidly buy or sell underlying assets, leading to additional expenses such as brokerage fees and other transaction charges.

At present, these costs are shared across all investors in the fund, including those who did not initiate any transactions.

This practice reduces returns for long-term investors, raising issues of fairness.

To resolve this, the SECP has proposed the implementation of Swing Pricing.

Under this mechanism, the extra costs generated by large or abrupt transactions would be borne by the investors responsible for them, rather than being passed on to others.

The regulator believes that the move will protect long-term investors, improve transparency, and enhance the stability of mutual funds during periods of market volatility.

It is also expected to bring Pakistan’s mutual fund industry in line with international best practices.

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