SBP Introducing Centralized Foreign Exchange Trading Platform

Muhammad Haris

State Bank of Pakistan (SBP) is introducing a Centralized Foreign Exchange Trading platform named ‘FX Matching’ for the interbank FX market.

The objective is to build an innovative and inclusive digital financial ecosystem that is a key priority area of SBP Vision 2028.

In this context, SBP is introducing a Centralized Foreign Exchange (FX) Trading Platform named ‘FX Matching’ for the interbank FX market.

The goal is to provide interbank market participants with a centralized trading platform offering FX trading on an anonymous basis and real-time price visibility.

The adoption of the FX Matching platform is crucial for enhancing the depth and transparency of the interbank FX market.

To formally launch interbank FX trading on the FX Matching platform, the following instructions are issued for Authorized Dealers (ADs):

A. Main Features of the FX Matching:

FX Matching will be accessible to all ADs (referred to as participants) for interbank USD-PKR trading (spot-labeled as spot on the platform).

The trading on the platform will be anonymous, allowing participants to place quotes or hit quotes without disclosing their names. Participants will learn about their counterparties after a trade is matched.

The best bid and offer quoted on the FX Matching will be visible to all participants; however, the best executable quote for a particular participant will depend on the availability of a counterparty limit.

Each participant can set credit limits for their counterparties in the FX Matching, and it is advised to have credit limits with major market participants for the best available quotes.

SBP has also set a minimum lot size for trading on FX Matching that amounts to USD 500,000 and multiples thereof.

Bid or offer prices placed on the FX Matching will be firm and remain valid until canceled by the quoting participant. Participants are advised to cancel all open orders before logging off from the platform and the close of the market for interbank FX trading.

B. Interbank FX Trading on the FX Matching and FXT Dealing:

Starting January 29, 2024, ADS must use FX Matching or FXT Dealing for executing outright interbank FX transactions affecting FEEL (Foreign Exchange Exposure Limit).

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ADs will be eligible to trade on FX Matching in line with the timings SBP had announced for interbank FX trading.

If the Federal Reserve Bank of New York is closed on any given day, and the interbank FX market is open in Pakistan, trading on the FX Matching will be in Tom value.

Participants should exercise caution in placing bids/offers and executing transactions on the platform, monitoring their orders to avoid executing erroneous trades.

C. Reporting of Deals on FX Matching and FXT Dealing:

The system will help to report all deals executed by ADs on FX Matching and FXT Dealing to SBP in real time. To ensure real-time reporting, both counterparties must confirm all tickets in the FX Matching and FXT Dealing immediately after the trade.

The existing end-of-day reporting mechanism using the Foreign Exchange Computerized Reporting System (FXCRS) will continue as per existing instructions.