Dhaka, Bangladesh (BBN)- The Primary Dealers Bangladesh Limited (PDBL) has proposed to introduce the market driven interest rate on the government treasury bills and bonds to boost the country’s securities market.
"Introduction of the market driven interest rate will encourage investors to invest more funds in the government securities that will also help raise the number of participants in the market," a senior PDBL member said, adding that the PDBL has submitted the proposals to the central bank recently for bringing dynamism in the country's securities market.
"We're examining the proposals considering the country's overall economic situation," a senior official of the Bangladesh Bank (BB) said without elaborating.
The country's primary dealer banks and financial institutions' apex body also requested the central bank to take joint coordinated promotional activities on government securities among domestic and foreign investors.
Under the initiative, Debt Management Department (DMD) of the central bank and the PDBL may take up jointly coordinated promotional activities on government securities among domestic and foreign investors.
The PDBL also want to amend or activate the existing law aiming to increase investment in government securities by the insurance companies and different funds like provident fund, pension fund and superannuation fund.
It has proposed to allow only PD banks and financial institutions for participation in the primary auction of the government securities.
"We've also recommended introduction of electronic trading and bidding platform for the government securities," the PDBL member said, adding that the PDBL wants repurchase agreement (repo) support under the standing facility in addition to existing assured liquidity support in order to minimize PDs liquidity risk exposure.
The central bank of Bangladesh earlier selected 15 PDs - 12 banks and three non-banking financial institutions (NBFI) - to handle government-approved securities in the secondary securities market.
BBN/SI/AD-26Sept10-12:54 am (BST)