SECP enhances investment limits for insurance companies to invest in ETFs

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The Securities and Exchange Commission of Pakistan (SECP), to encourage participation of insurance companies in the Exchange Traded Fund (ETF) market, has allowed insurance companies to invest in open-ended mutual funds including ETFs.

After these new amendments to the Insurance Rules, 2017, the insurance companies have now been allowed to invest 10% of their total investments in any one open-ended mutual fund including units of ETF. If insurance companies choose to invest in a mutual fund and ETF, managed by the same Asset Management Company (AMC) it may invest maximum up to 15% of their total investments.

Furthermore, if insurance companies already have investments with an AMC, they may also invest additional 5% of their total investments in ETFs offered by that AMC. The insurance companies’ participation in the capital market, as institutional investors, will strengthen Pakistan’s capital market. The SRO1011(I)/2022, to effect amendments to the Insurance Rules, 2017 and to notify the admissibility limits for investment in the ETFs, has been placed on SECP’s website.

 

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