1. To ascertain the correct level of exposure taken by the banks in terms of gaps running between maturity dates; all Authorized Dealers are hereby directed to revalue their book daily on mark to market basis. This system requires that each foreign exchange transaction should be revalued daily on the basis of rates prevailing in the market till its maturity. With a view to have uniformity, rates to be applied for such revaluation will be provided by the State Bank on its REUTERS page on the basis of domestic inter-bank market closing rates. In case an Authorized Dealer does not presently subscribe to REUTERS, efforts should be initiated to have the subscription. In the mean time such Authorized Dealers can obtain the rates directly from the State Bank Dealing Room.
2. All dealing room procedures must be clearly defined. Internal limits in respect of intra-day exposure, overnight exposure, amount of deal, counter party, etc. must be expressly and clearly determined and notified to every dealer. They should also be readily available in case required by the SBP staff for evaluation and inspection.
3. Functions of the Bank office and the Front office must be clearly segregated and accordingly the duties assigned to the staff of each office should be clearly specified. Bank office controls must ensure that all the deals done by the Front office/Branches must be entered in the books on the deal date.
4. All Front office as well as Back office operations be computerized.
5. The Front office/Back office systems be so designed as to essentially generate analytical reports for the management giving a true picture of the exchange/interest rate exposure taken by the Bank on the mark to market basis.
6. All foreign exchange transactions conducted by the Dealing Room/Branches on any given day must be taken into Bank'’ position on the same day. The Dealing Room and branches dealing with foreign exchange must be furnished with the required communication facilities to ensure that all relevant advises emanating from branches must reach the treasure in time.
7. Authorized Dealers must ensure that staff working in the treasuries is well versed with the core concepts/ conventions of foreign exchange transactions as well as the international ethics and code of conduct for the dealing rooms. The in-charge of dealing room as well as back office must have thorough knowledge and adequate experience in terms of foreign exchange dealings both in the domestic market as well as in the international market. The list of personnel working in the dealing room may also be submitted to the SBP dealing room along with their functions. Any change therein may be conveyed to the SBP dealing room immediately. Bank management must ensure that their staff is able to run the treasury business on the lines mentioned above. Authorized Dealers are well advised to coordinate their Dealing Room systems with the requirements of Dealing room at the State Bank.

3. Banks are advised to bring about the aforementioned changes in their Treasury Departments positively by May 30^th 1999.