SBP Allows Financial Institutions To Invest In Govt’s Papers

SBP has decided to introduce two additional categories of dealers, in addition to the full-fledge Primary Dealers, under the Primary Dealers System of marketable Government Securities, to generate funds for the government through maximum participation of the investors.

There will now be three categories of Primary Dealership, namely: Primary Dealers (“PDs”), Preliminary Primary Dealers (“PPDs”), and Special Purpose Primary Dealers (“SPDs”).


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SBP is now further strengthening the rules governing the PD system as a major step towards widening the investor base of government securities, enhance liquidity, transparency, and market development.

These revisions are being made after a comprehensive review of international best practices and experiences of other countries and detailed consultations with financial market stakeholders.

Role of Dealers

All the dealers shall be required to perform the following key roles to improve participation in primary auctions, enhance distribution, diversify the investor base and develop a suitable market for government securities:

  • Actively participate in the primary market by bidding in the auctions of Government securities as conducted by SBP from time to time.
  • Distribute Government securities to non-PD banks and other retail/institutional clients.
  • Play an active role in Government securities market development to enhance liquidity and turnover and widen the investor-base of government securities by creating awareness among investors and taking other meaningful initiatives.
  • For this purpose, the PDs, PPDs, and SPDs must also continuously upgrade their infrastructure in terms of both physical equipment and skilled manpower.
    Provide efficient custody services to its customers (Investor’s Portfolio of Securities Accounts) for Government securities holding, collection and, payment of profits & maturity proceeds.

Additionally, PDs and PPDs shall also act as market makers in Government securities by quoting two-way prices in the secondary market.

PSX Gong Ceremony

The Pakistan Stock Exchange (PSX) hosted Governor State Bank of Pakistan (SBP), Dr. Reza Baqir, at its Gong Ceremony to mark the beginning of a new chapter of cooperation between SBP and PSX on multiple initiatives.

The Governor SBP was warmly welcomed by the Chairman of the Board PSX, Mr. Sulaiman S. Mehdi, Board Members of PSX; MD and CEO of PSX, Mr. Farrukh Khan, and senior management. Also present at the Gong Ceremony were senior members of the Market, Bank Presidents, and Treasury Heads, along with senior management of SBP.


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Speaking at the occasion, Governor SBP, Dr. Reza Baqir, said that he has revised the rules governing the appointment of primary dealers for the government’s debt securities. This will expand the list of institutions eligible to work as primary dealers, including Security Depositories and Clearing institutions. This measure is aimed at widening the investor base of government securities, improving liquidity, enhancing transparency, and promoting market development.

In addition, SBP has relaxed the selection and performance criteria for Development Finance Institutions (DFIs), investment banks, and brokerage houses to encourage them to become part of the primary dealer system, which is currently dominated by banks. Hence, among other privileges offered to primary dealers, a larger and more diverse group of institutions will now have direct access to primary auctions.

Dr. Reza Baqir said, “While the government debt market in Pakistan is well developed and liquid, participation of capital market clients has historically been limited and SBP wants to encourage wider ownership of Government securities among retail investors.”

The Governor SBP noted that the revised primary dealer rules would cater to the needs of a diverse group of investors, including capital market clients, corporates, and individuals, and attract a new clientele to the government securities market. He shared, “This measure has been taken after detailed discussions with stakeholders and a comprehensive review of international best practices.”

He also mentioned that SBP has made changes in its prudential regulations to facilitate the sponsors, shareholders, and companies in raising more financing against the security of shares of their group companies. He highlighted that this amendment will help sponsors and companies in raising liquidity for further investment in new business opportunities and ventures, in turn leading to greater economic activity.

This regulatory change would also benefit the capital markets by encouraging sponsors of companies to consider listing on the stock exchanges. As a result, it will also promote documentation of the economy, transparency, and good corporate governance practices.


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Welcoming the SBP Governor to PSX, the MD PSX, Mr. Farrukh Khan, said that the Pakistan Stock Exchange will mark the beginning of a new collaborative journey dedicated to greater coordination between PSX as the frontline regulator of the capital market and SBP as the regulator for the banking industry in the country. This greater coordination would help to promote and foster an environment of increased activity in terms of online initiatives, the recently launched Roshan Digital Accounts for Overseas Pakistanis, and Government Debt Securities, amongst other segments.

He further stated that the journey of added cooperation and between PSX and SBP will benefit all stakeholders of the capital market, the banking industry, and the economy of Pakistan.



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