ISLAMABAD, Nov 2: The Securities and Exchange Commission of Pakistan has announced that foreign collaboration will no longer be a condition for the management of open-end mutual funds.

Under the Asset Management Companies Rules, 1995, management companies were required to collaborate with foreign fund managers of good repute to become eligible for managing equity and balanced open-ended funds.

This condition was to facilitate the transfer of technical knowledge and expertise from overseas fund management companies to the local industry. Most market participants now feel that this condition has outlived its usefulness.

The withdrawal of this condition should remove an unnecessary barrier for professional individuals or entities wishing to enter this industry and will save costs. It is a development initiative by the SECP. It is expected that all fund management companies will upgrade their technical skills, modernize procedures, enhance training budgets and adhere to the highest standards of corporate governance. To prevent market abuse, the SECP will be strengthening its approval criteria and enforcement systems.

Over the past few years, the mutual fund industry has witnessed a substantial growth as its size has proliferated from around Rs24 billion to more than Rs100 billion. The industry now offers a diversified range of funds.