July 25, 2003	Friday	Jumadi-ul-Awwal 24, 1424

KARACHI, July 24: Eleven banks and one money brokerage house have applied to become part of an expanded list of primary dealers eligible to buy government securities in auctions, banking sources said on Thursday.

Last month, the central bank invited fresh applications from commercial banks, investment banks and listed brokerage houses in an effort to increase the number of primary dealers.

Currently there are seven primary dealers, all of them are commercial banks.

Among those who had applied were Jahangir Siddiqui & Co. the only brokerage house on the list and a recently privatized bank, United Bank Ltd, the sources said.

Primary dealers must have minimum equity, net of provisions and capitalized losses if any, of Rs500 million.

A banking source said the central bank also implemented a new rule earlier this month whereby primary dealers can’t carry out pass-through bids. Pass-through is a process in which a primary dealer places a bid on behalf of a secondary participant.

The rule was aimed at containing speculative bidding, but bankers said the absence of a proper monitoring mechanism has prevented it to be enforced strictly.

The central bank is aiming to deepen the secondary government bond market by bringing in more participants.— Dow Jones Newswires