SBP Revolutionizes Interbank Trading with FX Matching Platform

The State Bank of Pakistan (SBP) is making strides towards a more innovative and inclusive digital financial ecosystem as outlined in its Vision 2028. As part of this initiative, they are introducing a Centralized Foreign Exchange (FX) Trading Platform called ‘FX Matching’ for the interbank FX market.

The goal is to provide a centralized trading platform that allows interbank market participants to engage in FX trading anonymously with real-time price visibility. This move is aimed at enhancing the depth and transparency of the interbank FX market.

To formally launch interbank FX trading on the FX Matching platform, specific instructions are issued for Authorized Dealers (ADs). Here are the main features of the FX Matching:

1. Availability: FX Matching will be open to all ADs for interbank USD-PKR trading.
2. Anonymous Trading: Participants can trade anonymously, placing quotes or hitting quotes without disclosing their identity. Counterparties are revealed after a trade is matched.
3. Price Visibility: Best bid and offer quotes on FX Matching are visible to all participants. However, the best executable quote for a participant depends on the availability of a counterparty limit.
4. Credit Limits: Participants can set credit limits for their counterparties, and it is advised to have credit limits with major market participants for better quotes.
5. Lot Size: Trading on FX Matching will be for a minimum lot size of USD 500,000 and multiples thereof.
6. Firm Prices: Bid or offer prices on FX Matching are firm and remain valid until cancelled by the quoting participant.
7. Trading Timings: Participants are urged to cancel all open orders before logging off, and trading on FX Matching will follow the timings announced by SBP for interbank FX trading.

Starting January 29, 2024, ADs are required to use FX Matching or FXT Dealing for executing outright interbank FX transactions impacting Foreign Exchange Exposure Limit. FX Swap transactions with the same counterparty will continue as usual.

All deals executed on FX Matching and FXT Dealing must be reported in real-time electronically to SBP. The existing end-of-day reporting mechanism using Foreign Exchange Computerized Reporting System (FXCRS) will continue as per existing instructions. Participants are reminded to exercise caution when placing bids/offers and executing transactions to avoid errors.