The State Bank of Pakistan (SBP) is introducing a Centralized Foreign Exchange (FX) Trading Platform called ‘FX Matching’ for interbank FX market in line with Vision 2028 for building an innovative and inclusive digital financial ecosystem as a key priority area.
The objective is to provide the interbank market participants a centralized trading platform that offers FX trading on an anonymous basis and real time price visibility.
The adoption of FX Matching platform is a key step for enhancing the depth and transparency of the interbank FX market.
In order to formally launch the interbank FX trading on the FX Matching platform, the banking regulator has issued instructions for the Authorized Dealers (ADs) in this regard.
Key features of FX Matching
FX Matching will be available to all ADs (participants) for interbank USD-PKR trading (in ready value labeled as spot on the platform). The trading on the platform will be on an anonymous basis which means participants will be able to place their quotes or hit quotes placed by another participant without disclosing their name.
The participants will be able to know their counterparties after a trade is matched.
The best bid and offer quoted on the FX Matching will be visible to all the participants; however, best executable quote for a particular participant will be subject to availability of counterparty limit. Each participant can set credit limits for their counterparties in the FX Matching.
The participants are advised to have credit limits with major market participants in order to get the best quotes available on the FX Matching. Trading on FX Matching will be for a minimum lot size of $500,000 and multiples thereof. The bid or offer prices placed on the FX Matching will be firm and remain valid until canceled by the participant quoting the prices.
The participants are advised to cancel all open orders (if not executed) before logging off from the platform and closing of the market for interbank FX trading.
Interbank FX Trading on FX Matching and FXT Dealing
Effective January 29, 2024, it will be mandatory for ADs to use FX Matching or FXT Dealing for executing outright interbank FX transactions that impact FEEL (Foreign Exchange Exposure Limit). FX Swap transactions concluded with the same counterparty will continue to be conducted as per current practice including FXT Dealing, telephone or other means.
ADs can trade on FX Matching as per the timings announced for interbank FX trading by SBP from time to time. In case on any given day, Federal Reserve Bank of New York is closed and interbank FX market is open in Pakistan, the trading on the FX Matching will be in Tom value.
Participants must be cautious in placing bids/offers and executing transactions on the platform and monitor their orders to avoid executing erroneous trades.
Reporting of Deals on FX Matching and FXT Dealing
All deals executed by ADs on FX Matching and FXT Dealing will be reported electronically to SBP in real time through the system. To ensure real time reporting, all tickets must be confirmed in the FX Matching and FXT Dealing by both the counterparties immediately after the trade.
The existing end of day reporting mechanism using Foreign Exchange Computerized Reporting System (FXCRS) will continue as per existing instructions.
