Abu Dhabi Group subsidiary becomes first market maker for debt securities in Pakistan

President of Bank Alfalah Atif Bajwa, 2nd left, and CEO Pakistan Stock Exchange Farrukh H. Khan, 2nd right, during a signing ceremony in Karachi, Pakistan on November 17, 2020. (Photo courtesy: PSX)

• Market makers perform critical role of providing liquidity to the stock market by quoting bid and offer prices
• Pakistan Stock Exchange was recently declared best performing equity market after making 19 percent return on investment

KARACHI: Bank Alfalah, a subsidiary of Abu Dhabi Group, become the first market maker bank for debt securities in Pakistan following an agreement with the Pakistan Stock Exchange (PSX) on Tuesday.
Market makers perform a crucial role of providing liquidity and depth to the market by continuously quoting two-way, bid and offer, prices, helping investors buy or sell securities.
Bank Alfalah will be able to perform market making activities for various debt instruments, such as the government debt securities like the Pakistan Investment Bonds, Treasury Bills as well as Sukuk, an Islamic financial instrument.
The agreement was signed by PSX Chief Executive Officer Farrukh H. Khan and Bank Alfalah President Atif Bajwa in Karachi on Thursday.
Speaking on the occasion, Bajwa said the development would help provide long term liquidity for investment, especially for the housing sector.
“We believe that a well-developed capital market is important from the perspective of both issuer and investor. This needs to be complemented by capital market instruments as an alternative and effective financing medium. At present, the domestic market is primarily focused on bank loans for financing requirements,” he explained.
Pakistan’s had the best performing equity market in the world in the third quarter of calendar year 2020, when the benchmark KSE100 index recorded an impressive return of 18 percent in rupee and 19 percent in dollar terms, according to the Topline Securities, a brokerage firm.
“Growth of the debt markets is an important strategic objective for PSX and critical for the economic growth of Pakistan. In line with the recent regulatory changes introduced by the Securities and Exchange Commission of Pakistan and PSX, Bank Alfalah has been approved as the first market maker of debt securities at the Exchange,” Farrukh Khan said.
The PSX chief hoped that the development would usher in a new chapter in the growth of debt market in Pakistan. “This will benefit both issuers and investors and bring Pakistan’s debt market to regional and international level,” he added.
Speaking on the occasion, Ali Sultan, Group Head Treasury & Capital Markets at Bank Alfalah, said that his organization wanted to move further ahead by assuming more active role in other markets, such as exchange-traded funds, as well.