Treasury bills, PIBs: 12 banks chosen by SBP to be primary dealers

Institutions will act as ‘market-maker’ in government securities trading.


Our Correspondent July 02, 2015
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.CREATIVE COMMONS

KARACHI: The State Bank of Pakistan (SBP) has selected 12 banking institutions as primary dealers for market treasury bills and Pakistan Investment Bonds for 2015-16.

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.

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

All financial institutions, except Allied Bank, served as primary dealers during the outgoing fiscal year, SBP records show.

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 a ‘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 investors’ 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 three primary dealers in the outgoing year were Habib Bank, NIB Bank and Bank Alfalah.

Primary dealers are eligible to claim underwriting commission, which is paid at the rate of five paisas per Rs100 irrespective of maturities in the long-term government securities sold in auctions.

Published in The Express Tribune, July 2nd, 2015.

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