SBP changes the Master Circular on Auction of Government Securities

In recent times, SBP made some changes in the Master Circular on Auction of Government Securities. It’s a step towards market-driven pricing.

To make it more suitable for the economy, SBP made some changes in the Master Circular on Auction of Government Securities.

SBP has made some adjustments to the guidelines associated with Participation in Competitive Auction and Participation in Auction through Non-Competitive Bidding (NCBs).

In this regard, Primary Dealers (PDs) will be required to submit competitive bids, for both Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs), in terms of the price up to four decimal points.

Earlier, Primary Dealers were required to submit competitive bids, for both MTBs and PIBs, in terms of price (up to four decimal points). However, the bid price for the long-term paper was expected to limit to a range of 50 basis points from the respective tenor prices appearing on Reuters PKRV page on the last working day prior to bidding.

According to the changes under the E-Participation in the auction through Non-Competitive Bidding (NCBs), the investors will now be permitted to submit one bid in a single course, in case of submission of multiple bids in one tenor by a single investor, all such bids would be employed as void.

Moreover, the cover for one investor in a single tenor will be associated with pre-auction target, i.e. 0.50% of the auction target subject to a minimum of Rs. 25 million and a maximum of Rs. 500 million.

Earlier, investors were permitted 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.

Moreover, the cover for one investor in a single tenor was associated with pre-auction target, i.e., 0.25% of the auction target subject to a minimum of Rs. 25 million and a maximum of Rs. 500 million.

As per the circular, these measures will be immediately effected. And all other instructions on the matter will remain the same.

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