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Fixed Income Market in Pakistan consists primarily of the interbank primary and secondary markets where government and corporate bonds, call money, deposits, institutional placements, and their derivatives are traded.

Participants in the Money Market

The participants in the local money market include the government as an issuer of government debt instruments; private sector corporations issuing short tenor debt instruments to raise funds and whose paper are traded in the secondary market; State Bank of Pakistan acting as an intermediary between the Ministry of Finance and the investors with regards to government debt and also monitoring and regulating money supply; primary market dealers authorized by the SBP to submit bids at the auctions of government securities conducted by the SBP; secondary market investors that includes banks, corporations, mutual funds and retail investors who invest in debt securities purchasing them from primary dealers or other investors in the secondary market; and interbank brokers who service lenders & borrowers or buyers & sellers of securities.

Instruments in the Money Market

Some of the actively traded instruments in the secondary market are:
Treasury Bills issued by the Ministry of Finance are actively traded and sold through regular auctions conducted by the SBP on fortnightly basis. They are issued in 3, 6 and 12 month tenors. Pakistan Investment Bond introduced in 2000 with maturities of 3, 5 and 10 years. Later PIBs of 15 and 20 year tenor were introduced and most recently the 7 year tenor was added. These instruments carry semi-annual fixed coupons. Term Finance Certificates issued by corporations and banks to raise funds. GoP Ijarah Sukuks are Shariah-compliant, Government-auctioned, medium-term floating rate debt instruments carrying semi-annual coupons and traded in the secondary market.

Government Investment Schemes

National Savings Bonds was launched recently by Central Directorate of National Savings in collaboration with the Central Depository Company (CDC). Government-backed bonds include Defense Savings Certificates, Special Savings Certificates, Income Certificates and Bahbood Savings Certificates.

Recent Developments

Corporate and sovereign debt markets have potential in Pakistan. However, lack of technical skills, formal trading platform and efficient price discovery has limited the participation in this asset class to select few financial institutions and high net worth individuals. In an effort to deepen and diversify the financial market in Pakistan, promote liquidity and provide an efficient mechanism for price discovery, particularly the bond market, a number of products and services were recently introduced.

Trading Platform

Government-issued tradable debt instruments such as Treasury Bills and PIB are actively traded over-the-counter (OTC) through approved interbank brokers whilst corporate bonds are traded at the Pakistan Stock Exchange on a computerized order-matching system called Bonds Automated Trading System (BATS). Information on BATS is available at

Treasury Bills and PIB are settled through a paperless book-based system by commercial banks at the State Bank of Pakistan; who also provides custodial services for the same. Corporate bonds are settled by the Central Depository Company of Pakistan (CDC) who also provides custodial services for these bonds. Information on State Bank of Pakistan is available at and on CDC at

Special Convertible Rupee Account

Government of Pakistan has, over the years, gradually liberalized the Foreign Exchange Regime in Pakistan with the objective of implementing free float Exchange Rate Mechanism (ERM) in the country. From a fixed rate mechanism of the early nineties, the country has moved toward liberalization of the foreign exchange markets. Resident Pakistanis are allowed to open foreign currency accounts, foreigners are allowed free movement of capital and funds in and out of the country, Special Convertible Rupee Accounts (SCRA) introduced in 1992 allow easy access to the capital markets in Pakistan from anywhere in the world. Although certain restrictions remain on current account transactions, today the exchange rate is determined by market mechanism and banks are allowed to provide forward cover to exporters and importers.