PSX holds gong ceremony for onboarding BankIslami as market maker

KARACHI: The Pakistan Stock Exchange (PSX) held a gong ceremony to welcome BankIslami Pakistan Limited as the “Market Maker” for the Shariah-compliant debt securities listed at the bourse, a statement said on Monday.

The management of the stock exchange welcomed the BankIslami team and started the proceedings by striking the gong to mark the beginning of the trading day and the onboarding of BankIslami as the market maker.

BankIslami successfully fulfilled all the requirements for the market maker and was notified by the Pakistan Stock Exchange on June 15, 2021 as designated market maker for Pakistan Energy Sukuk I and II.

With this notification and the completion of regulatory formalities, BankIslami has become the first Islamic bank in Pakistan approved by the Securities and Exchange Commission of Pakistan (SECP), as a licensed consultant to the issue to act as an investment agent and the advisor for Shariah-compliant debt securities, both listed and privately placed.

BankIslami celebrated these milestones with the local bourse and market through this magnanimous gathering.

Welcoming BankIslami as the market maker on the PSX, Farrukh Khan, managing director of the PSX, said: “A large and liquid debt capital market is very important for the economic development of Pakistan. In line with the capital market development plan, the SECP and PSX recently introduced regulatory changes, allowing the banks to become market makers.”

He said, “The addition of BankIslami Pakistan Limited, one of the top-tier Islamic banks in Pakistan, as the market maker for the Shariah-compliant debt securities on the PSX is a significant step forward in the ongoing collaboration between [the] banks and the capital markets to bring liquidity and depth to [the] Pakistan’s debt capital market.”

Talking about the new responsibility of BankIslami, Syed Amir Ali, president and chief executive officer of BIPL, said: “As a market maker for the designated securities (PESC I & PESC II), we will help add depth in the market for [the] Islamic fixed income securities by offering both bid and ask quotes to create liquidity for these securities. BankIslami applauds the stock exchange’s initiative to allow multiple market makers for a single security because it would not only add transparency to the market but would also tighten the spreads, which is very conducive for the market participants and investors.

As an Islamic bank, the blank sale and short selling are prohibited; therefore, the bank, while adhering to the Shariah principles, has to maintain an inventory of the underlying Shariah-compliant securities.

To increase the supply of competitively priced Shariah-compliant securities, BankIslami, as an advisor and investment agent, is facilitating Pakistan’s national flag carrier, PIA to raise Rs20 billion through the government of Pakistan guaranteed, statutory liquidity ratio (SLR) eligible, privately placed listed, Shariah-compliant Sukuk to be issued through the PSX book-building process and is named as “PIA Sukuk-I”.

For this landmark public sector Sukuk issuance, the National Bank of Pakistan (NBP) and the BIPL Securities Limited would serve as joint book runners.

Last year, BankIslami successfully concluded the initial public offering (IPO) and listing of BankIslami Ehad Sukuk, which happened to be Pakistan’s first listed Additional Tier-1 Modaraba Sukuk.

BankIslami Ehad Sukuk not only helped the bank in strengthening its Tier 1 capital but also gave the investors an access to the Shariah-compliant listed instrument.

The confidence shown by the investors in BankIslami, particularly in the challenging times due to the Covid-19 pandemic, was overwhelming. Currently, the Sukuk is being traded on its face value and has an investor base of 185, of which 30 are institutional investors and the rest are individuals.

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