Dhaka, Bangladesh (BBN) – The central bank of Bangladesh on Sunday extended the exclusivity of the primary dealers (PDs) for submission of bids in the primary auction of the government securities for the second time this year.
“Only the PDs will be allowed to submit the bid in the primary auction of government treasury bills and bonds until further instructions,” a senior official of the Bangladesh Bank (BB) told BBN, adding that the BB will take final decision in this connection after reviewing the performances of PDs until December this year.
The central bank issued a circular in this connection on Sunday and asked the managing directors and chief executive officers of all scheduled banks and financial institutions to maintain the instructions relating to submit of bids in the primary auction of the government securities.
The central bank introduced the system for the first time in Bangladesh for the April-June period this year to boost the country’s secondary securities market through strengthening the activities of the PDs.
On June 21 last, the BB has extended such exclusivity of the PDs for July-September period of this year.
Under the system, non-PD banks and financial institutions will take part in the auction only through the PDs.
The central bank earlier selected 15 PDs — 12 banks and three non-banking financial institutions (NBFIs) — to deal with government securities in the secondary market.
The PDs will subscribe and underwrite primary issues and make secondary trading deals with two-way price quotations.
A PD will not short-sell any particular issue and will not hold a short position in secondary dealings. The PDs will not act as inter-bank or inter-dealer brokers, which have been specified in the guideline.
BBN/SSR/SI-03Oct11-1:19 am (BST)
