August 1, 2022: The Securities and Exchange Commission of Pakistan (SECP) has introduced the concept of Digital Asset Management Companies (AMCs), to promote financial inclusion and to simplify investment in AMCs. A concept paper in this regard has been published on SECP website for public consultation.
Digital AMCs have the potential to facilitate investors and increase investor base, by reducing paperwork, providing services remotely, and leveraging customer data. These companies will provide all AMC services, including launching of allowed Collective Investment Schemes (CIS), online account opening to issuance and redemption of units and inter CIS conversions through digital means, where the investor is no longer required to visit any distribution point physically.
The concept note covers areas like challenges faced by brick and mortar AMCs, potential of digital AMCs in Pakistan, key ambitions underlying the development of Digital AMCs, and critical regulatory challenges. It also proposes a framework for addressing these identified gaps.
Simultaneously with publication of this Concept Paper, the SECP is also aiming to test the Digital AMC model in a sandbox testing environment.
In Pakistan, there are currently 21 AMCs with asset under management of Rs. 1.2 trillion. The mutual fund industry in Pakistan has only approximately 320,000 investors (0.14% of total population) which means this segment of capital markets is under-penetrated in comparison to other international jurisdictions.
