Exercising the powers conferred by sub-section (1) of Section 34 of the Securities and Exchange Ordinance, 1969, the Karachi Stock Exchange (Guarantee) Limited with prior approval of Securities and Exchange Commission of Pakistan has made amendments in the ‘Bonds Automated Trading System Regulations’. Pursuant to above approval the Governing Board of Director of the Exchange has allowed the waiver of basic deposit of Rs 150,000 required for entering into Debt Market. Price Discovery is the key element for the development of secondary market. Currently, the Circuit Breakers restrict price movement in TFCs by Rs 5.0 which shall be removed.
A new type of Order called ‘All or None’ is also approved by the commission, which would facilitate to fill the order completely OR not at all. In case there is insufficient supply to meet the quantity throughout the day, then the order will be cancelled at the close of market. This feature is being added with a view to cater for the dynamics of Debt Market where the buyer and sellers prefer to trade in pre-defined lots and tend to prevent from partial execution of their entered orders. Taking into considerations, the involved complexities in the concept, the management of the Exchange advises that the feature may not be used till the time the participant has full understanding of the concept and knowledge of the modalities of the feature.
In order to practically understand the concept, it is suggested that RFQ feature may be used and quantities may be mentioned. Functionality for Requests for Quotations (RFQ) shall also be available in the BATS. The RFQ is introduced to facilitate system based negotiation, it comprises of transmitting a request for bid/ offer through BATS to other market participants and subsequent receipt of quotes from market participants in respect of a BATS eligible security. A member may invite RFQ from maximum ten other identified market participants. The RFQ initiator shall have the right to accept or reject any or all bids or offers. The acceptance of bid or offer by an RFQ initiator shall result in a binding trade. BATS shall treat all data and commercial information placed in the system by market participants as strictly confidential. To achieve this objective, the system shall adopt the most suitable organization, procedure and technological processes.