November 7, 2002	Thursday	Ramazan 1,1423

KARACHI, Nov 6: Chairman of Securities & Exchange Commission of Pakistan Khalid A. Mirza says the SECP needs to move towards a single regulatory regime. “An asset manager should be able to manage mutual funds of all kinds, pension funds, insurance monies and other funds placed for management,” he said here on Tuesday.

Speaking at the launching ceremony of United Money Market Fund of United Bank Ltd. he said that the SECP had developed a set of rules aimed at having a single regulatory regime that will be issued under the umbrella of Non-bank finance companies (NBFCs).

He said SECP also needs a graded range of regulatory penalties to enforce compliance — not extremes as at present. “It is either curtains or do nothing,” he remarked referring to the lack of progressive penalties.

Mirza lamented that after more than 40 years the mutual funds industry has mobilized resources less than 10 per cent of market capitalization and less than 3 per cent of bank deposits. He said SECP had taken note of irregularities in the working of equity-based mutual funds — and if they fail to discipline themselves it would take some action.

UBL had offered units of United Money Market Fund (UMF) for subscription on November 1. Director of UAMC (the management company of UMF) Mir Mohammad Ali said the UMF units had already gained some value in the past five days and its units were trading at 102.18 up from 102.04 when subscription opened.

With the launch of UMF the number of mutual funds operating in Pakistan has increased to 43; of these 27 are state-operated while 16 are in the private sector. Currently the mutual funds industry is worth Rs20 billion and offers significant potential for growth. The launch of UMF that targets both retail and institutional investors is expected to deepen the market further. UBL is primary investor of the fund and has contributed seed capital of Rs250 million.

The minimum investment size in UMF is Rs5,000 and there is no limit on maximum investment.

The UMF will provide its units holders attractive daily returns from a portfolio of low risk assets. The investors will have the convenience of encashing the UMF units within three days of submission of redemption form. The unit holders will be entitled to tax credit under Income Tax Ordinance 2001. They will be liable to Zakat just like any other financial instrument; however, upon provision of an exemption affidavit, no Zakat will be deducted.

Speaking at the launching ceremony UBL president Amar Zafar Khan said: “The UMF objective is to provide relatively high income and liquidity while maintaining a high level of safety of principal. The investment will be made in a well-diversified basket of instruments including both short-term and long-term instruments. The medium-term investments would enable the fund to earn relatively high returns and would provide opportunities for capital appreciation whereas the short-term investments would assist in meeting liquidity and redemption requirements.”

Chief Executive of UAMC Shaharyar Ahmad said: “The current environment offers an attractive opportunity for revival and growth of mutual funds in Pakistan. This conducive environment has been created primarily due to lack of investment alternatives which has resulted in surplus liquidity in the market.