Asset management companies can now sell ETFs directly to investors

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has announced a comprehensive roadmap to improve and reactivate the Exchange Traded Funds (ETF) market.

The new plan aims to modernize the sector by providing digital platforms, simplifying investment procedures, and reducing overall costs for investors. A major shift in the framework will allow Asset Management Companies (AMCs) to sell ETFs directly to investors, bypassing the traditional requirement for broker assistance and the need to open separate brokerage accounts.

To further reduce investor expenses and increase market accessibility, AMCs will no longer be permitted to share a portion of their management fees with brokers for fund distribution.

Developed in consultation with the Pakistan Stock Exchange (PSX), NCCPL, CDC, and the Mutual Funds Association of Pakistan (MUFAP), the roadmap will be implemented in phases. A key feature includes allowing securities brokers to launch and administer their own ETFs, which is expected to increase product variety while lowering hefty administrative costs.

Additionally, low-fee options like Index Tracker Funds will be integrated into the Voluntary Pension System. To ensure the success of these changes, the SECP plans to upgrade digital infrastructure and launch nationwide investor awareness campaigns.

The SECP reiterated its commitment to strengthening the capital market through transparent, low-cost investment products. This progress is expected to bring greater depth to the market, improve investment flow, and increase participation from both retail and institutional investors.

Implementation instructions have already been issued to all relevant stakeholders, including the PSX, CDC, and various asset management firms.