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LSE to holds banks, FIs heads moot on trading govt securities

January 28, 2014

The Securities and Exchange Commission of Pakistan (SEP) has regularized the banking companies for proprietary trading at stock exchanges only in the government securities, the LSE Managing Director Aftab Ahmad Chaudhry said in a statement issued here Monday. He said that SECP in its SRO issued on January 23, 2014 had notified that banking companies approved by the Commission, based on criteria prescribed by State Bank of Pakistan (SBP), for proprietary trading in government securities at stock exchanges shall be exempted from the operation and requirements of Section 8 (1) of SE Ordinance, 1969 subject to certain conditions as prescribed by the SECP. After permission granted to banking companies by SECP, he added, the LSE would be holding a roundtable inviting the heads of the banks/Financial Institutions (FIs) appointed by the SBP as primary dealers in government securities, which were approved by the Commission. He said the FIs participation was previously under objection subjected to Section 8 (1) of the ordinance that bound the business owners to trade in the securities on any stock exchange. Albeit the relaxation had only been given in the trading of government securities such as the TFCs, Bonds, PIBs, T-Bills, Sukuk etc., however, this leniency would also add to the sustainability of the FIs. The LSE as a facilitator and mediator between the SECP and the participants upon a shrinking session, he added, would assist the exchange to formulize further regulations in the effective automation of introducing a new avenue to trade in a particular classification i.e. Government Securities . Aftab Chaudhry said that the recent development would attract International Fixed-Income Funds to invest in Pakistanís Government Securities and provide diversified portfolio investment avenues for the investors to hold direct ownership in Government Securities , which had currently little direct ownership in government bonds and bills. This would also bring price transparency and liquidity for government securities, he maintained. In order to promote Debt Securities Market in Pakistan and in the region as well, there was dire need to provide safe platform for a wide range of investors to hedge and speculate. He considered it as the best channel to inject savings of small investors into government backed securities, which were also known as risk-free investment.

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Source: Balochistan Times (Pakistan)

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