June 02, 2021: In continuation with its efforts to promote digitization and broaden the investor base in the Non-Banking Finance Services, the Securities and Exchange Commission of Pakistan (SECP) has issued guidelines on Mutual Fund Digital Platforms (MFDP).
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.
The first digital distribution platform, licensed by the SECP, will go live in the middle of June. Two more digital platforms are currently in the advanced testing phase under the first cohort of SECP Regulatory Sandbox. 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.
It is pertinent to mention that earlier this year, the SECP has made the advisory regulatory regime more inclusive by allowing licensed individuals to act as securities and futures advisors and allowing them to work as distributors for multiple asset management companies. It is expected that these regulatory measures will not only help in broadening the investors’ base but also enrich investors’ experience of digital financial services in Pakistan.
The guidelines are available at SECP’s website and can be accessed at https://www.secp.gov.pk/document/guidelines-for-mutual-fund-digital-distribution-platform/?wpdmdl=42442&refresh=60b771cda16b61622634957