In continuation with its efforts to promote digitization and to 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).
The guidelines are available on the SECP’s website and can be accessed here.
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. They help individual investors identify and compare the various financial products that are offered in the marketplace, and choose the one that best suits their investment objective and risk profiles.
The first digital distribution platform that is 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 and will allow them to make more informed decisions.
The 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 had made the advisory regulatory regime more inclusive by allowing licensed individuals to act as securities and future advisors, and allowed them to work as distributors for multiple asset management companies.
It is expected that these regulatory measures will help to broaden the investors’ base and enrich their experience of digital financial services in Pakistan.