Role of primary dealers, Financial Management

Role of Primary Dealers

To promote the investment activity in the Government Securities market, several countries have adopted licensed Primary Dealers (PDs) as important intermediaries in the market. The typical responsibilities of PDs are:

  • Meeting the minimum bidding requirements,
  • Giving two-way quotes, and
  • Providing information of the market activity to the central bank etc.

In some instances PDs have special rights to different activities in the money market like primary auctions, or some special facilities in market operations, open market operations, underwriting commission etc. PDs have an important role to play in the development of the secondary market for government securities. The prices of PDs account for all the available information, they trade in the market, and also provide the central bank with the latest market information, and design new instruments, etc. The vital role of PDs in the market requires some regulatory control and the central banks periodically review the performance of PDs and make their operations performance-based. Rating of PDs as established in Poland is a laudable feature.

The RBI designed the system of Satellite Dealers (SDs) from 1996 as a second player in the Government Securities market after the PDs. The specific objective of SDs is to promote retail investments. However, the system could not prove as useful as expected and was eliminated.

 

Posted Date: 9/10/2012 7:45:23 AM | Location : United States







Related Discussions:- Role of primary dealers, Assignment Help, Ask Question on Role of primary dealers, Get Answer, Expert's Help, Role of primary dealers Discussions

Write discussion on Role of primary dealers
Your posts are moderated
Related Questions
Question: Consider the following information:   Stock A Stock B Beta 0.8 1.4 Share price, $

Pension Fund Management: A Global Perspective Pension funds are known worldwide more for their social security element. They have assumed more importance from the day the priva

Advantages and disadvantage of pacipatory style of budgeting

Assume that the treasurer of a company has an extra cash reserve of $1,000,000 to invest for six months. The six-month interest rate is 8% per year in the U.S. and 6% per year in G

Accrued Payroll was $10,000 and $15,000 at the beginning and end of 20X4, respectively. The payroll expense for 20X4 totaled $520,000. Cash outflow for payroll during 20X4 totaled:

Q. What is Deferred Incomes? Deferred incomes are incomes received in advance before supplying goods or services. They represent funds received by a firm for which it has to su

Does financial leverage (debt) have any impact on the Free Cash Flow, on the Cash Flow to Shareholders, on the growth of the company and on the value of the shares? Debt has no

Explain how to measure the firm risk of a capital budgeting project. The firm risk of a capital budgeting project calculates the impact of adding a new project to the existing pr

Types of Capital Budgeting Decisions: A business organization has to quite normal face the problem of capital investment decisions. Capital investment defines as the investmen

Reasons for Growth of Hedge Funds Many Hedge Fund strategies have the ability to generate positive returns in both rising and falling equity and bond markets. Inclusion of Hedg