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Q NO:1
What is the procedure of T-Bill auction by state bank of Pakistan on groomberg auction
module?
ANS:
Online Auction of Market Treasury Bills and Pakistan Investment Bonds:
In order to bring more efficiency, State Bank of Pakistan has decided to automate the
auction process of Market Treasury Bills and Pakistan Investment Bonds through Bloomberg
auction module. Auction of MTBs and PIBs will be conducted online under Bloomberg ticker
AUPD according to following instructions and guidelines:
1. Competitive Auctions:
a. Effective February 20, 2013, the manual process of submitting the sealed auction bid letters
will be discontinued.
b. Primary Dealers will be required to submit bids through online auction system during the
stipulated time period.
c. The auction module is integrated with SBP systems; therefore, the entire auction process, from
bidding to settlement, has been fully automated.
d. The online auction module, along with the integration, has been extensively tested with PDs in
parallel with manual auctions.
2. Non Competitive Bids:
a. Effective February 19, 2013, Non Competitive Bids shall also be submitted online one day
before the competitive auction day during the stipulated time period.
b. PDs must input client name in Block Letters in Account fields available in online auction
system.
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c. The PDs will continue to submit the copies of clients’ letters, along with their original
covering letters, at SBP counter within one hour after close of online NCB bidding.
3. Other Auction Details:
a. SBP, two days before the competitive auction day, w.e.f February 18, 2013, will setup the
Auction page on AUPD for both the Competitive Auction and the Non Competitive Auction,
which will include all the relevant details.
b. No change in Bids will be allowed after the closure of bidding time.
c. Primary Dealers are required to keep a high speed internet connection as backup in case the
primary internet connection is not available for Bloomberg services due to technical or any other
reason.
d. In case, the backup internet also fails. Primary Dealer shall approach SBP, before auction
close time, with sealed bid letters, along with an authority letter, requesting SBP to incorporate
bids in the competitive auction.
e. If there is a city/country wide internet connectivity issue, SBP at its discretion may cancel
online submission of bids and require PDs to submit sealed bid letters at SBP counter. In this
regard, all PDs will be informed accordingly on Reuter’s page SBPK23 and Bloomberg’s page
14 of SBPK1.
f. Bid report of auction will be available on SBP website after announcement of auction result.
Q NO:3
What is CDS. Explain 3 elements of CDS?
ANS:
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A credit default swap is a financial swap agreement that the seller of the CDS will
compensate the buyer in the event of a debt default or other credit event. That is, the seller of the
CDS insures the buyer against some reference asset defaulting.
There are three Elements of CDS namely:
Account Holders
Issuers / R/TA
Eligible Pledgees.
These Elements have a defined role in the Central Depository System as the system is driven by
them without direct involvement of CDC on day-to-day basis
Account Holders:
Account Holders are divided into two categories; Account Holders and Participants. Both,
Account Holders and Participants have direct access to CDS. Account Holders are only allowed
to keep their beneficially owned securities whereas Participants, in addition to maintaining their
beneficially owned securities, are entitled to open Sub-Accounts in CDS in order to further
provide custody services to their clients.
Issuers:
The companies whose securities (both equity and debt) are inducted in CDS (directly in book
entry form or by the way of physical deposit of securities) are called Issuers.
Eligible pledgees:
Any Company, Corporation or Institution such as Banks / Financial Institutions /
Development Financial Institutions that are authorized to provide financing against securities can
join CDC in the capacity of Eligible Pledgees. Further, Stock Exchanges / Clearing Companies
can also join CDC in the capacity of Eligible Pledgees for risk management purpose.
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Q No: 4
What is an IPS account? Write the procedure to open an IPS Account.
ANS:
IPS Accounts are custodial accounts maintained for buying and holding
Government Securities (T-Bills, PIBs) on behalf of their customers.
Procedure to open an IPS Account:

Unformatted Attachment Preview

Q NO:1 What is the procedure of T-Bill auction by state bank of Pakistan on groomberg auction module? ANS: Online Auction of Market Treasury Bills and Pakistan Investment Bonds: In order to bring more efficiency, State Bank of Pakistan has decided to automate the auction process of Market Treasury Bills and Pakistan Investment Bonds through Bloomberg auction module. Auction of MTBs and PIBs will be conducted online under Bloomberg ticker AUPD according to following instructions and guidelines: 1. Competitive Auctions: a. Effective February 20, 2013, the manual process of submitting the sealed auction bid letters will be discontinued. b. Primary Dealers will be required to submit bids through online auction system during the stipulated time period. c. The auction module is integrated with SBP systems; therefore, the entire auction process, from bidding to settlement, has been fully automated. d. The online auction module, along with the integration, has been extensively tested with PDs in parallel with manual auctions. 2. Non Competitive Bids: a. Effective February 19, 2013, Non Competitive Bids shall also be submitted online one day before the competitive auction day during the stipulated time period. b. PDs must input client name in Block Letters in Account fields available in online auction system. c. The PDs will continue to submit the copies of clients’ letters, along with their original covering letters, at SBP counter within one hour after close of online NCB bidding. 3. Other Auction Details: a. SBP, two days before the competitive auction day, w.e.f February 18, 2013, will setup the Auction page on AUPD for both the Competitive Auction and the Non Competitive Auction, which will include all the relevant details. b. No change in Bids will be allowed after the closure of bidding time. c. Primary Dealers are required to keep a high speed internet connection as backup in case the primary internet connection is not available for Bloomberg services due to technical or any other reason. d. In case, the backup internet also fails. Primary Dealer shall approach SBP, before auction close time, with sealed bid letters, along with an authority letter, requesting SBP to incorporate bids in the competitive auction. e. If there is a city/country wide internet connectivity issue, SBP at its discretion may cancel online submission of bids and require PDs to submit sealed bid letters at SBP counter. In this regard, all PDs will be informed accordingly on Reuter’s page SBPK23 and Bloomberg’s page 14 of SBPK1. f. Bid report of auction will be available on SBP website after announcement of auction result. Q NO:3 What is CDS. Explain 3 elements of CDS? ANS: A credit default swap is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt default or other credit event. That is, the seller of the CDS insures the buyer against some reference asset defaulting. There are three Elements of CDS namely: Account Holders Issuers / R/TA Eligible Pledgees. These Elements have a defined role in the Central Depository System as the system is driven by them without direct involvement of CDC on day-to-day basis Account Holders: Account Holders are divided into two categories; Account Holders and Participants. Both, Account Holders and Participants have direct access to CDS. Account Holders are only allowed to keep their beneficially owned securities whereas Participants, in addition to maintaining their beneficially owned securities, are entitled to open Sub-Accounts in CDS in order to further provide custody services to their clients. Issuers: The companies whose securities (both equity and debt) are inducted in CDS (directly in book entry form or by the way of physical deposit of securities) are called Issuers. Eligible pledgees: Any Company, Corporation or Institution such as Banks / Financial Institutions / Development Financial Institutions that are authorized to provide financing against securities can join CDC in the capacity of Eligible Pledgees. Further, Stock Exchanges / Clearing Companies can also join CDC in the capacity of Eligible Pledgees for risk management purpose. Q No: 4 What is an IPS account? Write the procedure to open an IPS Account. ANS: IPS Accounts are custodial accounts maintained for buying and holding Government Securities (T-Bills, PIBs) on behalf of their customers. Procedure to open an IPS Account: Name: Description: ...
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