SBP Introduces FX Matching Platform to Enhance Interbank Forex Trading

[LRE-Azan]

SBP Introduces FX Matching Platform to Enhance Interbank Forex Trading

The State Bank of Pakistan (SBP) has officially introduced a centralized foreign exchange trading platform for interbank transactions, named FX Matching.

This platform is specifically designed to facilitate real-time and anonymous trading of US dollars against Pakistani rupees among authorized dealers.

By the SBP's Vision 2028 objectives outlined in a recent circular, the introduction of FX Matching aims to innovate and expand the digital financial ecosystem in Pakistan.

The platform represents a crucial step towards enhancing transparency and depth in the interbank foreign exchange market.

Authorized dealers (ADs) have received specific instructions and key components for the FX matching system to initiate trading. The platform sets a minimum trading lot size of $500,000 and its multiples.

Anonymity is a notable feature of the trading process, allowing participants to quote or respond without revealing their identities until a trade match occurs.

Additionally, participants can set credit limits for their counterparts in FX Matching, with the SBP advising the establishment of limits with major market players for optimal quotes.

Starting January 29, 2024, banks are mandated to utilize the forex matching platform for executing interbank foreign exchange transactions affecting the foreign exchange exposure limit.

In situations where the Federal Reserve Bank of New York is closed but the interbank FX market in Pakistan is open, trading on FX Matching will be conducted in Tom value.

This development follows a recent International Monetary Fund (IMF) report urging authorities to avoid exchange rate restrictions. The IMF emphasized that the SBP should limit its FX market interventions to building foreign exchange reserves and not impede the rupee's depreciation driven by market fundamentals.

Authorities are anticipated to intensify efforts to eliminate existing exchange restrictions and multiple currency practices in early 2024.

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