Introduction
Currency Market Associates (CMKA) was established in 1994 and is a leading brokerage house of the country. On regular basis, it provides professional service with excellent research on foreign exchange and money market to its clients. Our customers are all major Commercial Banks, Islamic Banks, Non-Bank Financial Institutions (NBFI’s), Asset Management Companies (AMC’s) and Multinationals.

Foreign Exchange Broker
Foreign exchange brokers service the currency needs of commercial banks and corporate sector. The role of the broker is to achieve best rates for their clients. Clients also look towards the brokers for guidance of exchange rate movements and for strategies to manage their currency exposure and counter adverse exchange rate fluctuations. Foreign exchange brokers have access to wide-ranging market information, which provides real-time foreign exchange rate data as well as news and analysis of a wide variety of events that can cause currency rate movements. Brokers need to keep abreast of both general news and market specific news, which can range from Central Bank interventions in the market to interest rate changes and announcements by key officials on economic policy issues.

Money Market Broker
Money market is a component of the fixed income market, which is where fixed income securities are traded. Money market is the financial market where borrowing and lending are done on a short-term basis, and this market includes several different types of securities that are actively traded. Money markets are made up of banks, financial institutions, governments, and other entities that borrow and lend money for short-term purposes, usually three to twelve months. There are several types of Government Securities Instruments that are traded in the inter-bank money market, which commonly known as Pakistan Investment Bonds (PIB’s), Treasury Bills and Ijarah Sukuks (Islamic Financial Instruments). Another money market instrument is Term Finance Certificates (TFC’s), which is a corporate debt instrument, but is not commonly traded in inter-bank market, as it is ill-liquid instrument.

In comparison Government Securities are considered much safer and more stable than other investments, because they are extremely liquid. They are safe because the securities are almost guaranteed to return the principal on the investment, along with interest payments until the security matures. Therefore, government papers are less risky and are considered safe for investments. It is important to add that majority of the companies having retirement and pension plan invest in these securities. Insurance companies and pension fund such, as EOBI is a major buyer of Government Securities. The investment in money market is certainly different from the stock market. Investments in money market require high amounts and denominations. There is no trading floor or exchanges for the money market, because trading is done electronically and through recorded phone system. A brokerage house get a commission for acting as the agent for the investor (buyer & seller) while the investor takes all of the risks of a loss.

Money market instrument like Treasury bills can be bought directly from State Bank of Pakistan through nominated Primary Dealers of Commercial Banks. Individuals can also invest in money markets by using money market mutual funds or money market bank accounts. These two options take the assets of many investors and pool them together, so that money market securities in respectable size can be purchased without a single investor having to raise large amounts of money. Instruments and securities that are traded in the markets will vary on the rate of return and the risks involved, but they are generally viewed as a lower risk lower return alternative to other markets that can be more volatile in nature.

Nature of Work of a Brokerage House
The majority of banks’ Foreign Exchange (FX) and Money Market (MM) traders/dealers use the services of a broker to handle their transactions. So it is vitally important to understand that exactly what a brokerage house does and how it assists. In simple terms in a Pakistani market, Foreign Exchange dealer representing a brokerage house Buys and Sells Pak Rupee versus US Dollar on behalf of a two different banks after negotiating a price. Similarly a MM dealer borrows or lends Pak Rupee against security or clean money, or Buys or Sells securities at a bid and offer price on behalf or on instructions of two different banks or the second party could be a financial institution or a corporate customer. All Forex and MM deals are settled directly by the counterparts and broker sends a deal contract. The broker then earns money for his house in several ways by earning commission or by setting a fee for his services. A very important factor is that a broker who executes trade orders should be quick with minimum slippage probability. Timely execution of deal is very important and should be a clearly stated policy about the duration of change in price. The software and telephone lines used for trading purpose by the brokerage house and its back office are also especially important for banks’ treasury.