No. |
Current
Rules |
New
Amended Rule |
Primary
Dealer's Privileges: |
C-1 |
Only
PDs would be eligible to participate in the auctions
of Government Securities. The requirement of other
banks/institutional investors would be covered from
these PDs or from other secondary market players.
However, PDs will sell the government securities
to other banks and financial institutions after
auction on the market prices. PDs will not be allowed
to entertain pass through bids. |
Only
designated PDs would be eligible
to participate in the auctions of Government Securities.
The requirement of other banks/ institutional investors
would be covered from these PDs or from other secondary
market players.
PDs
will be allowed to entertain Pass-through bids,
but such volumes will not be counted towards secondary
market performance evaluation of the respective
PD. |
C-3 |
PDs
would be allowed to carry a short position in securities
managing it through repos up to a maximum of three
consecutive months for bonds and two weeks for T-bills.
However, they would be required to mark to market
their short positions on weekly basis and report
them to SBP on prescribed formats. |
PDs
would be allowed to carry a short position in securities
managing it through repos up to a maximum of three
consecutive months for bonds and two weeks for MTBs.
However, they would be required to mark-to-market
their short positions on daily basis and
report them to SBP on prescribed formats. |
No. |
Current
Rules |
New
Amended Rule |
Primary
Dealer's Obligations: |
D-1
|
PDs
would actively participate in all auctions of tradable
government securities. The State Bank of Pakistan
would announce maturity wise pre-auction target
amount in long-term government securities. Non-competitive
bids however as 10% of the pre-announced auction
target will be accepted by the State Bank of Pakistan
for investors other than banks/ DFIs/ NBFIs through
PDs. |
PDs
would actively participate in all auctions of tradable
government securities. The State Bank of Pakistan
would announce pre-auction target amount in short-term
as well as in long-term government securities.
Non-competitive
Bids (NCBs) will be allowed for both MTBs and PIBs.
Non-competitive bids however will be accepted
as 15% of the pre-announced auction target
by the State Bank of Pakistan for investors
other than banks/ DFIs/ NBFIs through PDs. |
D-2 |
An
important responsibility of the PD will be to underwrite
the auctions of Long-term paper offered by the State
Bank of Pakistan. To avoid any out of market quotes
the bid price for both for T-bills and long term
paper would be confined to a range of + 50
paisa from the one prevailing on the last working
day. |
An
important responsibility of the PD will be to underwrite
the auctions of Long-term paper offered by the State
Bank of Pakistan. To avoid any out of market
quotes the bid price for long-term paper would be
confined to a range of + 50 basis points
from the respective tenor prices appearing on Reuters
PKRV page on the last working day prior to bidding. |
D-3 |
Each
PD shall be required to ensure compliance of minimum
underwriting target of 3.5% in case of long
term paper over one year (July - June) and compliance
to this shall not be restricted on each auction
basis. The non-compliance for underwriting requirements
by PD may affect renewal of its primary dealership
for next year. |
Each
PD shall be required to ensure compliance of
minimum underwriting target of 3.5% to be
applied on the Pre-auction target or the issued
amount, whichever is lower, for respective tenors
of PIBs (July - June) and compliance to
this shall not be restricted on each auction basis.
The non-compliance for underwriting requirements
by PD may affect renewal of its primary dealership
for next year. |
D-4 |
Each
PD shall be eligible to claim underwriting commission,
to the extent of his underwriting amount as 3.5%
of the target amount announced or the bid amount
accepted, whichever is less, in respect of auction
of Long Term securities. The claim for underwriting
commission shall be lodged by PD after the settlement
date. |
Each
PD shall be eligible to claim underwriting commission,
to the extent of minimum underwriting target
(as explained in rule D-3) or the bid amount
accepted, whichever is less, in respect of auction
of Long Term securities. The claim for underwriting
commission shall be lodged by PD after the settlement
date. |
D-7 |
It
would be compulsory for all the PDs to quote their
prices to other PDs, if the transaction volume is
up to PKR 100 million subject to availability of
limit. For volumes other than that, there would
be no mandatory requirement to quote a price. But
in case of deals with other secondary market players
e.g. Non-PDs, institutional investors etc. each
PD would quote two way prices regardless of the
volume, subject to availability of limit. |
It
would be compulsory for all the PDs to quote two-way
prices to other PDs, Non-PDs, and institutional
investors etc. as per instructions contained in
rule D-8, subject to availability of limit. |
D-8 |
In
secondary market, all PDs would be bound to make
prices within a maximum bid/offer spread of 50paisa.
The quotes would be in price terms and not in terms
of yield. |
In
secondary market, all PDs may quote in terms
of yield rather than price. In case of PIBs, the
maximum bid/offer spread will be 15bps for on the
run issues up to 10 years tenor bonds. In case MTBs,
the maximum bid/offer spread for on the run issues
will be 25bps.
PDs
have to ensure two-ways prices in secondary market
within above defined maximum bid/offer spreads for
marketable lot-size for both MTBs and PIBs. The
marketable lot-size for MTBs will be in range of
PKR 100.0mln - 300.0mln (multiples of PKR 100.0mln).The
marketable lot-size for PIBs will be in range of
PKR 50.0mln - PKR 200.0mln (multiples of PKR 50.0mln).
On-the-run
issues defined for above obligation would represent
last the two issues in the market. |
D-10 |
At
any given day, a PD’s holding in a particular
issue will not exceed 30.0% of the total issue amount
and 15.0% for Non-PD. |
At
any given day, a PD's holding in a particular issue
with days to maturity greater than 1-year will
not exceed 30.0% of the total issued amount or PKR
1.5billion, whichever is higher in each tenor. However
for Non-PDs the limit will be 15.0% or PKR 1.5 billion,
whichever is higher, in each tenor. The PDs
issue-wise holding limit of 30.0% will run-down
to 15.0% of the issued amount on expiry of 90days
from the purchase date of that particular issue.
This revised limit would apply only on issues sold
during FY'08 and onward.
Compliance
to above instructions on current holding as on date
of this circular by PDs, be effectively met by 30Sep2009. |
PD
Performance Criteria: |
E-1 |
Each
PD should be required to ensure compliance of minimum
underwriting target of 3.5% in case of long term
paper over one year (July-June). |
Each
PD should be required to ensure compliance of minimum
underwriting target of 3.5% to be applied on the
Pre-auction target or the issued amount, whichever
is lower, for respective tenors of PIBs (July-June). |
E-3 |
Each
PD should bring a minimum of 5.0% of the NCB target
of long term paper during a year. However, for non-competitive
bidding, the ceiling will be linked with auction
target i.e. 0.25% of the auction target or PKR 25.0
million whichever is higher. |
Each
PD should bring a minimum of 5.0% of the
NCB target of MTBs and PIBs during a fiscal year.
However, for non-competitive bidding, the ceiling
for one investor will be linked with pre-auction
target i.e. 0.25% of the auction target or PKR 25.0million,
whichever is higher. In case of breach of
this limit through submission of multiple bids in
one tenor, all such bids would be treated as void. |