T-bills, bonds: SBP selects 12 institutions as primary dealers

All these financial institutions served as primary dealers in the last fiscal year as well

KARACHI: The State Bank of Pakistan (SBP) has selected 12 financial institutions as primary dealers for market treasury bills and Pakistan Investment Bonds for 2016-17.

The central bank invites applications from banks, development finance institutions (DFIs), investment banks and listed brokerage houses for the appointment of primary dealers for Pakistan’s debt market every year.

The selected banks are NIB Bank, Habib Bank, National Bank, JS Bank, Standard Chartered Bank Pakistan, United Bank, Pak Oman Investment Company, Faysal Bank, MCB Bank, Citibank, Allied Bank and Bank Alfalah.

All these financial institutions served as primary dealers during the last fiscal year (2015-16) as well, SBP records show.

The central bank requires that all institutions applying for the primary dealership must meet the minimum paid-up capital requirement as at the end of last financial year.



Primary dealers are supposed to participate in the trading of government papers in the primary market by bidding in the auctions of government securities conducted by the SBP from time to time.

They are also required to distribute government securities to banks that are not primary dealers and other retail/institutional clients besides playing the central role in the secondary market development to enhance its liquidity and turnover.

Most importantly, these 12 institutions will act as ‘market-maker’ in government securities trading by quoting two-way prices in the market. As market-makers, these institutions ensure that government securities remain liquid in the market and are always ready to be sold or purchased.



Also, primary dealers provide custody services to their customers that have investor portfolio of securities accounts for government papers holding, collection and payment of profits and maturity proceeds.



The SBP announces the name of three best-performing primary dealers at the end of each fiscal year. The best-performing dealers in the outgoing year were Habib Bank, National Bank of Pakistan and Allied Bank.

Primary dealers are eligible to claim underwriting commission, which is paid at the rate of five paisa per Rs100.

Published in The Express Tribune, July 5^th, 2016.

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