In order to promote insurance firms’ involvement in the ETF market, the Securities and Exchange Commission of Pakistan (SECP) has permitted them to engage in open-ended mutual funds, including Exchange Traded Funds (ETFs).
The Insurance Rules of 2017 have been updated to allow insurance firms to invest up to 10% of their total investments in a single open-ended mutual fund, including ETF units. Insurance firms may spend a maximum of up to 15% of their total investments in mutual funds and ETFs managed by the same Asset Management Company (AMC).
Insurance firms may additionally invest an additional 5% of their total investments in ETFs provided by an AMC if they already have investments with that AMC.
As institutional investors, insurance companies’ engagement in the capital market will strengthen Pakistan’s capital market. The SECP website now includes a copy of the SRO1011(I)/2022, which implements changes to the Insurance Rules, 2017 and notifies the admissibility limitations for investing in ETFs.