SEC Directs Collective Investment Schemes to Limit Foreign Securities Exposure
By Praisebell Rosemond Larbi
The Securities and Exchange Commission (SEC) has issued a new directive capping the level of foreign securities exposure permitted for Collective Investment Schemes (CIS), as part of measures to strengthen investor protection and reduce systemic risks to Ghana’s financial market.
Under the directive, which takes effect immediately, Collective Investment Schemes licensed to operate as domestic funds are now restricted to investing no more than 20 per cent of their total funds under management in foreign securities. Schemes that are licensed to invest abroad are permitted a higher exposure but must still retain at least 30 per cent of their assets in the domestic market, effectively capping foreign investments at 70 per cent.
In a statement accompanying the directive, the SEC explained that the decision was informed by a “growing interest in and appetite for investing in foreign securities by Managers of Collective Investment Schemes and the potential effects this could have on the stability of the Ghanaian Cedi and the country’s macroeconomic indicators at large.”
The Commission noted that increasing offshore exposure could expose investors to risks originating from jurisdictions beyond the SEC’s direct regulatory oversight. Such risks, if not properly managed, could undermine investor protection, weaken market confidence, and amplify external shocks transmitted into the domestic financial system.
According to the SEC, the new limits are intended to ensure that a substantial portion of CIS assets remains invested locally, supporting domestic capital market development while reducing vulnerability to foreign market volatility and sudden capital flow reversals.
For schemes permitted to invest abroad, the SEC stressed that all foreign investments must qualify as “securities” under Section 216 of the Securities Industry Act and must be undertaken only in approved eligible markets as defined by existing regulations. In addition, foreign investments will only be allowed in jurisdictions where the local securities regulator is either a full signatory to the International Organization of Securities Commissions (IOSCO) Multilateral Memorandum of Understanding, or has a formal information-sharing or capacity-building agreement with the SEC.
To ensure alignment with the new rules, the directive requires trustees of unit trusts and directors of mutual funds to update their scheme particulars accordingly. These changes must be regularised at duly constituted investors’ meetings or annual general meetings, in line with Section 86 of the Securities Industry Act. Schemes that are currently non-compliant have 90 days from the date of issuance to restructure their investment mandates and compliance frameworks.
The SEC warned that failure to comply with the directive could attract enforcement actions under Section 209(4) of the Act, including regulatory sanctions aimed at preserving market integrity and investor confidence.
While the directive is effective immediately, the Commission indicated that it retains the authority to amend, vary, revise, or revoke the rules in response to evolving market conditions. It further clarified that any questions relating to the interpretation of the directive should be referred directly to the SEC, whose interpretation shall be deemed final.
The move underscores the regulator’s broader effort to balance market openness with financial stability, at a time when cross-border investment flows are increasing and macroeconomic risks remain elevated.
