PSX to auction T-bills, PIBs from next month

Salman Siddiqui
November 17, 2023

Published in: The Express Tribune

KARACHI: Pakistan Stock Exchange (PSX) is all set to facilitate the auction of government debt securities (GDS) like T-bills and Pakistan Investment Bonds (PIBs) and allow the general public to invest in these products smoothly.

Briefing media on the planned launch of its GDS platform next month, PSX MD and CEO Farrukh H Khan on Thursday announced that the stock market and the State Bank of Pakistan (SBP) would jointly float the debt securities in the near future. So far, the central bank alone has been conducting the auction of T-bills and PIBs.

Recalling that the government had earlier issued a Sukuk worth Rs200 billion at the PSX, Khan said the auction saved the government billions of rupees in profit payment on the Sukuk as investors offered huge financing at a return almost one percentage point lower than the rate of return on bonds issued through conventional means.

He explained that the special thing about GDS auction at the PSX was that the common man would also be able to invest directly in T-bills and PIBs even with small financing. Later on, they could trade the securities as well.

This is expected to generate high volumes at the bourse because institutions and the general public both will keenly invest in the sovereign debt securities.

All the 200 stockbrokers and 30-40 banks will participate in selling and trading the debt securities.

He clarified that high-networth investors could also invest in the debt securities through selected banks.

The MD stressed that technology had enabled the PSX to increase the number of investors in recent times as the investor base had remained stagnant or been declining for about a decade.

He revealed that over 80% of investor accounts at the PSX “are now being opened online”. Some 60% accounts are being opened from small cities while 40% new accounts are being opened through Sahulat accounts.

PSX Chief Marketing and Business Development Officer Raeda Latif, in her presentation on “Online only Brokers”, said that the objective of introduction of the new broker category was to offer trading licences to new entrepreneurs like startups and fintechs at low costs and ramp up trade activities.

She said the exchange had received two to three applications for the new category of stockbrokers but expected a higher interest in the near future.

The PSX MD added that a number of companies had returned to the bourse for initial public offerings (IPOs) following some improvement in economic activities.

He praised the caretaker government for taking a number of tough decisions to turn the economy around including the successful completion of the International Monetary Fund (IMF) first review.