BHB adopts treasury bills trading guidelines
MANAMA, January 25, 2016
Bahrain Bourse (BHB) has adopted guidelines on the trading of treasury bills (t-bills) in its market.
Shaikh Khalifa bin Ebrahim Al Khalifa, chief executive officer, said the t-bills market is one of the joint initiatives between the Central Bank of Bahrain and the bourse that aims to enhance and develop the capital markets sector in the kingdom and increases the depth of the market by offering investors with more investment options.
“We hope that all related parties benefit from the markets available at BHB in order to meet their financing needs as this instrument is they are considered less costly for issuers in comparison to other ways of financing,” he said.
It is known that treasury bills are one of the investment instruments used by governments and central banks for short-term financing with reasonable returns taking in consideration the term of these issues that is usually between three to nine months, said a statement.
T-bills are usually issued monthly, and are considered very low-risk investments for investors, it said.
According to the guidelines, investors can submit their orders to the brokers to enter them in the t-bills market through the automated trading system that will match the buy and sell orders in accordance with the principles for matching orders as per the ‘Matching Priority’ rule of BHB.
The minimum accepted order in the t-bills market will be BD5,000 ($13,273) or its equivalent in the t-bill currency.
In addition, the guidelines determine the pricing and settlement mechanism implemented in the t-bills market, in which the automated trading system will automatically calculate the full value of the t-bills in each transaction individually calculated until the settlement date based on the duration the t-bill has been held.
The settlement day for the trades is two days following the trade date (T+2).
The guidelines also stipulate that the daily price variations (up or down) is limited to a maximum of five per cent of the previous closing price.
T-bills are issued through a competitive bidding process at a discount from par, which means that rather than paying fixed interest payments like conventional bonds or Islamic sukuk, the appreciation (movement) of the t-bills toward maturity provides the return to the holder until he gets the full par value of the T-bills at maturity. - TradeArabia News Service
