Net assets in cash – AMCs directed to maintain at least 5%

The Securities and Exchange Commission of Pakistan (SECP) has made it mandatory for all Asset Management Companies (AMCs) to maintain at least 5 percent of net assets in cash under the head of equity funds in line with the new liquidity requirements for mutual funds.

According to the direction number 2 of 2017 issued by the SECP here on Monday, the commission has specified the liquidity requirements for mutual funds. The SECP has also directed all AMCs to comply with the new requirements by February 15, 2017, the SECP said.

The SECP in exercise of the powers conferred under Section 282D of the Companies Ordinance, 1984 hereby directs that all AMCs shall comply with the following requirements: At all times, an AMC shall maintain at least 5 percent of net assets in cash and near cash instrument in Equity Funds (other than dedicated equity funds) and Funds of Funds. The AMCs that are currently not complying shall ensure compliance latest by February 15, 2017, the SECP said.

An AMC shall arrange committed credit lines from banks/DFls equivalent to 15 percent of net assets of each fund latest by March 1, 2017 for redemption purposes. In case, where redemption requests exceed ten percent of the total number of units in issue of fund on anyone dealing day, the redemption requests of AMCs and its sponsors, if any, shall have least priority for redemption on that day, the SECP added.