KARACHI: The Karachi Stock Exchange ‘soft launched’ trading of government debt securities on its Bond Automated Trading System (BATS) on Friday.

The government debt securities market (GDS Market) of KSE is set to allow secondary market trading of government securities at the stock exchanges.

“The soft launch is aimed at testing the IT platform and post execution settlement processes so that the formal launch by the finance minister in a few weeks’ time is smooth and without hitches”, a KSE official said.

Five participants executed trade on Friday: AKD Securities, Arif Habib Securities, Bank Alfalah, JS Global and KASB Securities.

KSE Managing Director Nadeem Naqvi speaking on the occasion stated that the ‘soft launch’ was a major milestone in the development of Capital Market.

He lauded the efforts of Finance Minister Ishaq Dar for providing strong support for the project which helped in making it a reality.

“The average saver and investors can now invest directly in government securities, such as treasury bills, Pakistan Investment Bonds and Islamic Sukuk Ijara Securities through their broker,” which the KSE MD asserted would encourage greater savings in the country as the return on government securities was typically higher than bank deposits of similar maturities.

The secondary market was expected to provide liquidity, enabling easy entry and exit for investors. In terms of investment risk, Naqvi highlighted that where government

securities were held till maturity they provided guaranteed return with no risk of capital loss.

Thus investors could be expected to create investment portfolios having a combination of government securities and shares whereby downside risk could be reduced by the former while enabling capture of upside return from the latter.

All efforts were made to make the investment process relatively easy for retail investors and explained the process.

“At no stage in the transaction, would the investors’ money or securities be in custody of the broker and these would be directly settled at the CDC. This method removes the intermediation risk for the investor,” the KSE chief observed.

The State Bank of Pakistan has allowed Primary Dealer (PD) banks to participate in KSE’s GDS Market and act as market makers if they so wished, Naqvi said and emphasised that the burden of making GDS market a success and useful for investors fell on the stock brokerage industry and informed that a comprehensive investor awareness generation programme was already underway by Karachi, Lahore and Islamabad stock exchanges.