Karachi - The Karachi Stock Exchange ‘soft launched’ trading of Government Debt Securities on its Bond Automated Trading System (BATS) performed on Friday.
The Government Debt Securities Market (GDS Market) of KSE will allow secondary market trading of Government Securities in the Stock Exchange. The soft launch will test the IT platform and post execution settlement processes so that the formal official launch by the Finance Minister in a few weeks’ times is smooth and without hitches.
Nadeem Naqvi, Managing Director KSE, speaking on the occasion of the soft launch stated that this was a major milestone in the development of Capital Market in Pakistan.
He praised the Finance Minister Ishaq Dar for providing strong support for this project which helped in making it a reality. He said that the average saver and investors could now invest directly in Government Securities, such as Treasury Bills, Pakistan Investment Bonds and Islamic Sukuk Ijara Securities through their brokers. This would encourage greater savings in the country as the return on Government Securities was typically higher than bank deposits of similar maturities while the secondary market would provide liquidity, enabling easy entry and exit for investors.
KSE MD explained that all efforts had been made to make the investment process relatively easy for retail investors. If an investor wanted to invest in Government Securities all he/she had to do was, first open a brokerage account (with a stock broker) and an IPS account with CDC. Once the accounts were operational, the investors would need to deposit funds in CDC’s designated bank account one day before trade (purchase) and instruct the designated broker to purchase the type and rupee amount of T-Bills, PIB’s or Sukuks.
The designated broker, on the trade date, would execute the transaction after confirmation that funds were available at CDC. After execution of the trade, CDC would transfer the respective Government Securities to investors’ IPS account held at the CDC. The Broker, in the meanwhile, would also provide the investor with confirmation of the transaction. At no stage in the transaction, would the investors’ money or securities be in custody of the broker and these would be directly settled at the CDC. This method removes the intermediation risk for the investors. The trade executed and settled today on Friday had five participants, i.e., AKD Securities, Arif Habib Securities, Bank Alfalah, JS Global and KASB Securities.