Observer Report Karachi
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.
SBP and PSX have recently been working closely to improve and widen the access of capital market participants to government debt securities; facilitate investments by non-residents in the stock exchange; remove bottlenecks hindering companies from leveraging against shares of their group companies and developing information sharing arrangements between banks and capital markets.
Speaking on the occasion, Governor SBP, Dr. Reza Baqir said he was pleased to visit PSX for this Gong Ceremony as it marked the commitment of SBP and PSX to work together for the deepening of debt and capital markets in Pakistan and improving financial intermediation.
He made three important announcements in this regard. First, he said that SBP has revised the Rules governing 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.
He said that 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.
