BB appoints four more primary dealers

The central bank has appointed four more financial institutions as primary dealers, aiming to bring dynamism to the government securities market.
Mercantile Bank, Mutual Trust Bank and non-bank institutions IPDC and LankaBangla Finance were awarded the licences on Tuesday, officials said.
With the new four, the number of primary dealers now stands at 13. Of them, 10 are banks and three non-bank institutions.
In August, Bangladesh Bank sought applications from commercial banks and non-bank financial institutions for appointment as primary dealers.
“We've given approval to more dealers to boost the country's under-performing securities market,” said an official with the Debt Management Department of Bangladesh Bank.
“We hope the primary dealers will play a role in creating a competitive atmosphere for the government securities market.”
A primary dealer is a bank or securities broker-dealer that may trade directly with the central bank. Such institutions are required to make bids or offers when Bangladesh Bank conducts open market operations, provide information to its open market trading desk, and to participate actively in government treasury securities auctions.
These dealers purchase a vast majority of government treasury securities such as T-bills and T-bonds sold at auction and resell them to the public.
Following banks' and non-bank financial intuitions' poor interest in the securities market, the central bank in August offered higher underwriting commissions for treasury bills and bonds for top three primary dealers.
The top dealers will receive 0.03 percent (3 paisa) instead of 0.025 percent (2.5 paisa) in underwriting commission for the government-approved treasury bills and 0.08 percent (8 paisa) instead of the existing 0.075 percent (7.5 paisa) for bonds.
The central bank will select the top primary dealers considering their performance on participation in the primary auction and transactions of the government-approved securities in the secondary market on a quarterly basis.
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