KARACHI: State Bank of Pakistan has modified the auction guidelines for Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs) as a step toward more market-driven pricing and diversification of government securities’ investor base, it said on Wednesday.
“For participation in the competitive auction, the primary dealers (financial institutions) will submit competitive bids, for both MTBs and PIBs, in terms of price (up to four decimal points), as per new amended rule,” the central bank said in a circular.
Currently, the primary dealers submit competitive bids, for both MTBs and PIBs, in terms of price (up to four decimal points); however, the bid price for long-term paper is confined to a range of +/- 50 basis points from the respective tenor prices appearing on the last working day prior to bidding.
Under the new rule, the central bank said, the investors seeking participation in auction through non-competitive bidding, would be allowed to submit one bid in a single tenor, in case of submission of multiple bids in one tenor by a single investor, all such bids would be treated as void.
“The ceiling for one investor in a single tenor will be linked with pre-auction target i.e. 0.50 percent of the auction target subject to minimum of Rs25 million and maximum of Rs500 million,” the circular said.
However, currently the ceiling for one investor in a single tenor is linked with pre-auction target i.e., 0.25 percent of the auction target subject to minimum of Rs25 million and maximum of Rs500 million, according to the circular.