BHBNewsLetter March 2016

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Issue 7 - March 2016 @BahrainBourse
THE BOURSE LISTS 10 TREASURY BILL ISSUES WORTH BD542 MILLION
Bahrain Bourse (BHB) an-
nounced on Sunday, 6th March
2016 the listing of 10 issues in
the Treasury Bills Market worth a
total of BD542 million, issued by
the Central Bank of Bahrain with
discount rates ranging between
1.86% and 2.14% for 3-6 months.
With the listing of those is-
sues, the total number of
Treasury Bills listed at Bah-
rain Bourse became 19 issues.
It is known that Treasury Bills
are one of the investment instru-
ments used by governments and
central banks for short-term fi-
nancing with reasonable returns
taking in consideration the term
of these issues that is usually be-
tween 3-12 months. T-Bills are
usually issued weekly and month-
ly, and are considered very low-
risk investments for investors.
It is worth mentioning that the
bourse launched the Treasury
Bills Market on 31st January
2016 with the aim of enhanc-
ing cash liquidity in local and
foreign banks and institutions
dealing in this market, and pro-
viding investors in BHB with
more investment opportunities.
BAHRAIN BOURSE ADOPTS THE TREASURY BILLS TRADING GUIDELINES
The Chief Executive Officer
of Bahrain Bourse (BHB), Sh.
Khalifa bin Ebrahim Al-Khali-
fa issued on Sunday, 24th January
2016 Resolution No. (1) of 2016
in respect of adopting the Guide-
lines on the Trading of Treasury
Bills (T-Bills) at the Bourse.
Sh. Khalifa said that the T-Bills
Market is one of the joint initia-
tives between the Central Bank
of Bahrain (CBB) and Bahrain
Bourse that aims to enhance and
develop the capital markets sector
in the Kingdom of Bahrain and
increases the depth of the market
by offering investors with more
investment options. Sh. Khalifa
expressed his sincere thanks to
the officials of the CBB and H.E.
Mr. Rasheed Moh’d Al-Maraj, the
Governor of the CBB for their
efforts and cooperation in trans-
forming this initiative to a reality.
“We hope that all related parties
benefit from the markets available
at BHB in order to meet their fi-
nancing needs as this instrument is
they are considered less costly for
issuers in comparison to other ways
of financing,” Sh. Khalifa added.
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 3-9
months. T-Bills are usually issued
monthly, and are considered very
low-risk investments for investors.
Trading in Treasury Bills will be
conducted during the trading
session of BHB, from Sunday to
Thursday between 9:30am and
1:00pm. According to the guide-
lines, 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 is BD5000 (Five
Thousand Dinars) or its equivalent
in the T-Bill currency. In addition,
the guidelines determine the pric-
ing and settlement mechanism
implemented in the T-Bills Mar-
ket, in which the Automated Trad-
ing System will automatically cal-
culate 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 settle-
ment 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
5% of the previous closing price.
T-bills are issued through a com-
petitive bidding process at a dis-
count 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.
It is worth mentioning that a
Resolution was issued by BHB’s
Chariman last Wednesday in re-
spect of introducing the Treasury
Bills Market at Bahrain Bourse
and adding it to the markets at
BHB. Several T-Bills issued by
the Central Bank of Bahrain are
expected to list at the Bourse that
will enable investors to trade this
new instrument and benefit from
its availability in the secondary
market. Adding the T-Bills Mar-
ket to BHB will provide inves-
tors the opportunity to diversify
their investment portfolios and
manage their risk by investing
in more than one instrument.