All Head of Primary Dealers/Scheduled Banks/NBFIs

Dear Sir/Madams,

Non-Competitive Bids – Modus Operandi

Reference is drawn to EDMD Circular No. 13 dated September 18, 2003 on the captioned subject and FSCD Circular No. 7 dated June 6, 2009 regarding rules governing primary dealer system. According to Para D-1 of rules governing PD system, non-competitive bids are set at 15% of the pre-announced auction target of MTBs/PIBs in each tenor for investors other than banks/DFIs/NBFIs through primary dealers.

The facility is intended to accommodate individual and small institutional investors to invest directly in Government of Pakistan issued Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs). However, the quantum size of non-competitive bids for one investor will be linked with auction target i.e. 0.25% of the pre-announced auction target or PKR 25.0 million, whichever is higher.

The following modus-operandi has been laid down for tender/acceptance of non-competitive bids:

1. The non-competitive bid will be sent to SBP separately from the normal bids before commencement of primary auction time with the name and amount of investors without quoting price through primary dealers.
2. Investors will be allowed to submit one bid in a single tenor, incase of submission of multiple bids in one tenor by single investor, all such bids would be treated as void.
3. The non-competitive bid(s) will be accepted at weighted average yield in each tenor as decided in the primary auction.
4. In case of over subscription, non-competitive bids will be accepted in order of lowest to highest amount or on pro-rata basis.

The format for submission of non-competitive bids is enclosed. Please acknowledge receipt and bring these instructions to the notice of all concerned.

TENDER FORM
(NON COMPETITVE BID)

NAME OF PRIMARY DEALER ………………………………………………………………………………….

Dated: …………………………….

The Director,
Domestic Markets &
Monetary Management Department (DMMD),
State Bank of Pakistan, Karachi

PLACEMENT OF NON-COMPETITIVE BIDS FOR
MARKET TREASURY BILLS/PAKISTAN INVESTMENT BONDS

Pursuance to the tender notice published by the State Bank of Pakistan on ……………….…... for the sale of Market Treasury Bills/Pakistan Investment Bonds we M/s ……………………………………..…………. apply for purchase of Market Treasury Bills/Pakistan Investment Bonds as follows:

Maturity Period: ……………………………..

Signature

(Name of an authorised Signatory with Stamp)

Important Note:

1. Separate tenders will be required for each maturity of MTBs/PIBs.
2. Investor is allowed to submit one bid in a single tenor.