Dhaka, Bangladesh (BBN)– Primary dealer (PD) banks have urged the central bank to extend the timeframe for securities held under ‘held for trading (HFT)’ category until December 2011instead of October (of the same year).

“We’ve requested the central bank for extension of its proposed timeframe for such treasury bonds to minimize our valuation adjustment loss of the government approved securities,” a senior member of the Primary Dealers Bangladesh Ltd (PDBL) said, adding that they have already submitted their opinions formally to the central bank for taking necessary measures.

On January 15 last, the central bank proposed a new calculation system for valuation of the treasury bonds held by the PD banks to help minimize any adjustment loss.

The Bangladesh Bank (BB) also sought opinions from the PD banks, which were to be submitted by the latter on or before Wednesday in this connection.

“The central bank is working on the issue,” a BB senior official told BBN, adding that the BB might issue a circular in this connection on Thursday.

The bonds, issued between April 2009 and October 2011 and categorized as HFT by the PDs, may be remeasured at amortized cost instead of fair value, according to the BB’s proposal.

“In future, HFT securities remaining unsold for two years from the date of purchase shall have to be remeasured at amortized cost,” the central bank said in its proposal.

The proposal also said the remeasured securities will be eligible for statutory liquidity ratio (SLR), repurchase agreement (REPO) and assured liquidity support (ALS).

“All other present regulations relating to ‘held for maturity (HTM)’ securities will be applicable for remeasured securities,” it noted.

The central bank of Bangladesh earlier selected 15 PDs — 12 commercial banks and three non-banking financial institutions (NBFIs) — to deal with the government-approved securities in the secondary market.

The PDs will subscribe and underwrite primary issues and make secondary trading deals with two-way price quotations.

BBN/SSR/AD-18Jan12-11:59 pm (BST)